FAR - Financial Statement Acct - Current Liabilities Flashcards
liabilities represent?
outsider claims to a firm’s assets or are enforceable claims for services to be rendered by the firm.
exact amount payable for a liability must be known before it can be recorded?
false - definite liabilities (payroll liab - don’t have to be exact)
liab due on demand? What kind of liab?
current liab
current liabilities are recorded at nominal/face value?
true
three key elements of liabilities.
- future sacrifice of economic benefits;
- Obligations to transfer assets or provide services in the future;
- Result of past transactions or events.
understand when ownership of inventory via payments, FOB shipping point/FOB, takes place to record increase/decrease in A/P for balance sheet purposes
True
Overdrafts cause a liability to the bank. Accounts payable is used for trade purposes only.
True
Current = during the next year or operating cycle, whichever is longer
True
Loan in violation of terms, full liability is recorded as current liability
True
Watch out for debit balances in A/P, prepayments have their own account and are not related to A/P.
True
A/P used only for routine trade payables, typically for purchases of inventory and supplies; secured debt is NOT A/P
True
underlying accounts that give rise to the deferred tax liability must be noncurrent, which causes the deferred tax liability to be also noncurrent
True
How are nonmonetary liabilities paid?
Services/non-monetary assets
Sales tax payable
Account recognized for sales tax collected from customers, when sales collected, tax from sale Is an immediate liability
What payroll taxes are paid in equal amounts by the employer and the employee?
Federal Insurance Contributions Act (FICA) tax, Medicare.
