Chapter 13 Notes Accounting

Current Liabilities

A. Classification
1. Current Liabilities--current liabilities are liabilities that will
mature in less(prenominal) than one course of study or one operating cycle, whichever is
longer
2. long Liabilities--long-term liabilities are liabilities that will
mature in greater than one year or one operating cycle, whichever is
longer

B. Accounts Payable--accounts account payable are vocal promises to others to pay for
goods or services purchased on open account
1. Valuation--in practice, en unadulterated expense related to the accounts
payable is ignored because the center of the rabbet is not usually
material in relation to the net income for the period
2. hard cash Discounts--when cash discounts are offered as an inducement for
prompt payment, the amount of the accounts payable may be recorded
using either the down-to-earth rule or the net method
a.



Gross Method--the gross method assumes that cash discounts will not
be taken and highlights the discounts taken
1) Accounting
a) Date of Borrowing--accounts payable and the related
expense/asset are recorded at the gross notice price
b) Date of Payment--any discounts taken are recorded as a
reduction in the related expense/asset
2) Illustrations
a) A raft purchased inventory on open account at an
invoice price of $5,000; terms were 2/10,n/30; the
corporation gainful the invoice within the discount period
Purchases 5,000
Accounts Payable 5,000

Accounts Payable 5,000
interchange 4,900
(5,000 2% x...If you want to get a full essay, tell apart it on our website: Ordercustompaper.com



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