Acct Test 3 Ch11
About this set
Created by:
creho001 on December 4, 2010
Subjects:
current liabilities and payroll accounting
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32 terms
Terms | Definitions |
|---|---|
 liability | is a present obligation that grew out of a past event and will require a future sacrifice to extinguish the obligation. |
| Current liabilities | ________liabilities are expected to be paid within one year or the normal operating cycle of the company' whichever is longer. |
| Long-term liabilities | ________ liabilities are not expected to be paid or extinguished within one year. |
| accounts payable, sales tax liabilities, unearned revenues, short-term notes payable, payroll liabilities, multi-period known liabilities | determinable liabilities |
| Cash DB Sales CR Sales Payable CR | sales taxes payable JE |
| note payable | is a written promise to pay a specific amount at a definite future date. They normally bear interest. |
| Accounts Payable DB Notes Payable CR | note payable JE establishment |
| Cash CR Notes Payable DB Interest Expense DB | note payable JE pay back |
| promissory note | is issued to borrow money from the bank. |
| Cash DB Notes Payable CR | End-of-Period Adjustment to Notes JE - issuance of note |
| Interest Payable CR Interest Expense DB | End-of-Period Adjustment to Notes JE - adjustment at year end |
| Notes Payable DB Interest Expense DB Interest Payable DB Cash CR | End-of-Period Adjustment to Notes JE - note falls due' and is paid in full |
| payroll liabilities | are costs to your employer. |
| Gross pay | is the amount you actually earn during a pay period |
| Gross pay deductions | amounts are withheld for social security (FICA) taxes' Medicare taxes' and federal income taxes, (state and local income taxes), voluntary deductions |
| net pay | Your gross pay less all withholdings' mandatory and voluntary' is your ______. This is the amount of cash you can put in the bank. |
| federal and state unemployment taxes. | our employer must pay all __________ and ________ taxes. |
| payroll tax expense DB FICA SS CR FICA Medicare CR FUTA CR SUTA CR | record the payroll tax expenses paid by employers |
| Salaries Expense DB FICA SS CR FICA Medicare CR Federal Income tax CR Accrued Salaries Payable CR | payroll entry to record the employees' withholdings and net pay |
| subscriptions and long-term notes payable | Two common multi-period liabilities include _______and ____________ that have a portion maturing each year. |
| warranty liabilities | Many products sold are covered by a ______. The seller is liable for replacing or repairing the product while it is under ______. |
| warranty expense DB estimated warranty liability CR | warranty liabilities JE - date of sale |
| estimated warranty liability DB Inventory CR Salaries Payable CR | warranty liabilities JE - has to fix something on item sold with warranty |
| cost x historical warranty cost % | The amount of the estimated liability is determined by _____ |
| contingent liability | is a potential liability whose outcome depends upon the occurrence of some future event. |
| no action | remote contingent liability |
| Disclose the liability in the notes to the financial statements | reasonably possible contingent liability |
| record the contingent liability | probable contingent liability that can be estimated |
| Disclose the liability in the notes to the financial statements | probable contingent liability that cannot be estimated |
| Times Interest Earned ratio | is a measure that helps creditors assess the risk of a loan |
| income before interest and income taxes / interest expense | Times Interest Earned ratio (the higher the lower the risk of nonpayment) |
| Income before interest and income taxes | = operating income |
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