Term
| What is the definition of liabilities? |
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Definition
| Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. |
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Term
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Definition
| Present obligation that entails settlement by probable future transfer or use of cash, goods, or services |
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Term
| What is an unavoidable obligation? |
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Definition
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Term
| Define Current Liabilities? |
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Definition
| Obligations whose liquidation is reasonably expected to require use of existing resources properly classified as current assets, or the creation of other current liabilities. |
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Term
| What are accounts payable or trade accounts payable? |
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Definition
| balances owed to other for goods, supplies, or services purchased on open account. |
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Term
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Definition
Written promises to pay a certain sum of money on a specified future date.
May arise from purchases, financing, or other transactions. |
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Term
| What is the Discount on Notes Payable balance and what does it represent? |
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Definition
| the interest expense chargeable to future periods. |
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Term
| What should companies do if parts of long-term debts are going to mature soon? |
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Definition
| They should report the maturing part of long-term debts as current liabilities. |
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Term
| If a liability has a callable feature how should it be placed on the balance sheet? |
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Definition
| It should be a current liability because if the company does anything wrong then most likely the bond will be called. pg. 641 |
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Term
| How do you properly exclude a short-term obligation from current liabilities and make it a long-term liability? |
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Definition
1. Must intend to refinance the obligation on a long-term basis.
2. It must demonstrate an ability to consummate the refinancing |
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Term
| What are the two rules of ABILITY to consummate the refinancing? |
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Definition
1. Actually refinancing the short-term obligation by issuing a long-term obligation or equity securities after the date of the balance sheet but BEFORE it is issued.
2. Actually entering into a financing agreement |
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Term
| What are cash dividends payable classified as and when are these usually paid? |
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Definition
| They are classified as current liabilities and they must be paid within one year of declaration. Dividends that are declared create a dividends payable account. |
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Term
| What are dividends payable in the form of additional shares of stock? Where do they report this? |
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Definition
| They are called stock dividends. this is not a liability. Usually reported under stockholder's equity. |
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Term
| What are returnable cash deposits? |
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Definition
| Deposits from customers or employees that will in the future be returned. Can be a long-term or short-term liability. |
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Term
| How does unearned revenues work? |
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Definition
Debit cash then credit a unearned revenues account. Then when you actually earn the revenue you debit unearned revenue and you credit the revenue account you earned it from.
This is recorded as a current liability. |
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Term
| How are partnerships and proprietorship taxed? |
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Definition
| They are taxed through personal income taxes. |
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Term
| What are the most common payroll deductions? |
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Definition
| Taxes, insurance premiums, employee savings, and union dues. |
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Term
| What is the taxable rate for Social Security? And what is the limit till? |
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Definition
| The percentage rate is 6.2% and its until $106,800 |
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Term
| What is the taxable percentage for Medicare? |
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Definition
| 1.45% and make sure that beyond $106,800 you still use this percentage. |
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Term
| What is the percentage that FICA takes out of taxes? |
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Definition
| 7.65% until $106,800 then only 1.45%. |
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Term
| Who pays unemployment taxes? What criteria are necessary for paying these taxes? |
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Definition
Only employers that meet the criteria:
1. Those who paid wages of $1500 or more during any calender quarter or preceding year.
2. Employed at least one individual on at least one day in each of 20 weeks during the current or preceding calendar year.
Its on the first $7,000 earned for each employee |
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Term
| Who pays unemployment taxes? What criteria are necessary for paying these taxes? |
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Definition
Only employers that meet the criteria:
1. Those who paid wages of $1500 or more during any calender quarter or preceding year.
2. Employed at least one individual on at least one day in each of 20 weeks during the current or preceding calendar year. |
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Term
| What is the employee responsible for in income tax withholding's? |
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Definition
| Income tax withholding payable, FICA taxes payable, Union Dues payable |
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Term
| What is the employer responsible for in income tax withholding's? |
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Definition
| FICA taxes payable, Federal/State unemployment payable |
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Term
| What are examples of compensated absences? |
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Definition
| Vacation, illness,holidays. |
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Term
| What must happen for companies to accrue a liability cost for compensation? |
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Definition
1. The employee has rights to have future absences.
2. The rights are vested or accumulated.
3. Payment is probable
4. It can be reasonably estimated. |
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Term
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Definition
| When the employee has an obligation to make payment to an employee even after terminating his or her employment. |
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Term
| What are accumulated rights? |
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Definition
| Rights that can be carried over but must be accrued. |
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Term
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Definition
| An existing condition, situation, or set of circumstances involving uncertainty as to possible gain, or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur. |
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Term
| The only gain contingency that a company can record is? |
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Definition
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Term
| When does a company record gain contingencies? |
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Definition
| IN the notes only if their is HIGH probability existing for realizing them. |
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Term
| What is a liability incurred as a result of a loss contingency? |
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Definition
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Term
| What are some of the more common loss contingencies? |
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Definition
1. Litigation, claims, and assessments
2. Guarantee and warranty costs
3. Premiums and coupons
4. Environmental liabilities |
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Term
| What are the basic methods of accounting for warranty costs? |
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Definition
| the cash-basis method and the accrual method. |
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Term
| What is the sales warranty? |
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Definition
| Companies defer revenues on the sale of the extended warranty |
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Term
| What are examples of obligating events? |
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Definition
1. decommissioning nuclear facilities
2. dismantling, restoring, and reclamation of oil and gas properties
3. certain closure, reclamation, and removal costs of mining facilities
4. closure and post-closure costs of landfills. |
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