Liabilities Flashcards
1
Q
Liabilities with Principal at Maturity: Taking out the loan
A
DR Cash
CR Bank Loan
2
Q
Liabilities with Principal at Maturity: Year after loan was taken out, but has not yet matured
A
DR Interest Expense
CR Interest payable
3
Q
Liabilities with Principal at Maturity: Year the loan matures
A
DR Interest payable (last year’s interest payable)
DR Interest expense (this year’s interest expense)
DR Bank loan
CR Cash
4
Q
Liabilities with Instalment Payments
A
DR Cash CR Bank loan (taking out loan) DR Interest exp DR Bank loan CR Cash (each year) as loan gets closer to maturity, blended instalment payments less related to interest and more related to the reduction of the principal
5
Q
Operating line of credit: borrowing
A
DR Cash
CR Bank indebtedness
6
Q
Operating line of credit: repayment
A
DR Bank indebtedness
DR Interest expense
CR Cash
