Chapter 10 - Liabilities How to Account for Current Liabilities Current Liability a debt that a company expects to pay within one year or the operating cycle whichever is longer Current liabilities include Notes Payable Accounts Payable Unearned Revenues Accrued Liabilities Taxes Payable Salaries and Wages Payable Interest Payable Basically all things youll have to pay for in the upcoming year are current liabilities Current Liabilities Notes Payable Written promissory note Frequently issues to meet short-term financing needs Requires the borrower to pay interest Issued for varying periods Notes payable are different than accounts payable because 1 Notes are formalized in writing with a set due date and interest rate 2 Accounts payable is typically just a vendor offering a customer 30 days to pay an invoice as a courtesy Notes Payable Example

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Chapter 10 - Liabilities How to Account for Current Liabilities ● Current Liability: a debt that a company expects to pay within ○ one year or ○ the operating cycle, whichever is longer ● Current liabilities include ○ Notes Payable ○ Accounts Payable ○ Unearned Revenues ○ Accrued Liabilities ■ Taxes Payable ■ Salaries and Wages Payable ■ Interest Payable ● Basically, all things you’ll have to pay for in the upcoming year are current liabilities Current Liabilities | Notes Payable ● Written promissory note ● Frequently issues to meet short-term financing needs ● Requires the borrower to pay interest ● Issued for varying periods ● Notes payable are different than accounts payable because: ○ 1) Notes are formalized in writing with a set due date and interest rate ○ 2) Accounts payable is typically just a vendor offering a customer 30 days to pay an invoice as a courtesy Notes Payable Example Current Liabilities | Sales Taxes Payable ● Sales taxes = Stated percentage of the sales price ● In NJ (and many other states), most products and services are subject to sales tax ○ If vendors sell a taxable item, they must collect sales tax on behalf of the state (NOT OPTIONAL) ● Selling compan...