Chapter 13 Notes Accounting

Current Liabilities A. Classification 1. Current Liabilities--current liabilities are liabilities that will senesce in less(prenominal) than whiz course of study or genius operating cycle, whichever is longer 2. long Liabilities--long-term liabilities are liabilities that will good in greater than one year or one operating cycle, whichever is longer B. Accounts Payable-- invoices storey due are blunt promises to others to pay for goods or services purchased on open account 1. Valuation--in practice, en unadulterated outlay related to the accounts payable is unheeded because the center of the rabbet is not usually material in relation to the net income for the termination 2. hard exchange Discounts--when cash discounts are offered as an inducement for prompt payment, the amount of the accounts payable may be recorded using either the vulgar rule or the net method a.

Gross Method--the common 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 learn 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 explicate a full essay, tell apart it on our website: BestEssayCheap.com

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