Chapter 13Current Liabilities

Definitions Liabilityp. 25 / p. 739 Current liability

Operating cycle Illus 3-2 page 117Working capital Current Ratio

Discuss terms on trade accounts payables

E13-1 Notes payable interest bearingP13-1p. 741 Line of Credit vocabulary word

BE13-4 Commercial Paper discussp. 743 < 270 days multiples of $25,000

Accrued Expenses i.e. recognize the expense now, pay laterTalk about accrued Bad Debt Expense

Exp exp & pay in yr 1cash pay & cash in yr 2

Interest expense / payableSalaries expense / payable

E13-4, E13-5 Vacation or sick leave expense / payable4 conditions that require accruing compensated absences

p 745 Illus 13-7 Relates to prior work (provided the services)Vests / accumulates / must be paid if employee leavesPayment is probableAmount can be estimated

P13-5 Bonuses

BE13-8 Sales Tax Payable plus follow up JE to pay state

E13-6, 7 Deposits and Advances received from customers

P13-3 p. 749 current maturities (current portion) of long-term debtE13-13 maybe Show the Amortization Table from the Web

E13-11 NoncurrentShort term obligation expected to be refinancedRefinancing Intent & Abilitywhy would management prefer to report debt as LT instead of current ?

employee service has already been performed

Chapter 13-B Contingencies

Litigation, claims & assessmentsIllus 13-16 Loss contingencies

probable & reasonably estimablepossibleremote

Contingency v Warranty page 714 Green BoxBE 13-15 p 188 extraordinary items?BE13-12 Warranty E13-15 accrual basis v cash basis

extended warranties -- i.e. Unearned Revenue

E13-19 Premiums

Subsequent Events --- provide additional information

Ratios Current RatioAcid Test Ratio or Quick Ratio

Appendix Payroll show state and federal

E13-27http://clubs.cob.calpoly.edu/~cmiller/ACTG%20425%20page.html P13-13

Part B expected cash flow approach don’t worry about thisUnasserted claims read but don’t worry about