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Terms in this set (24)
Are obligations that a company reasonably expects to pay within one year or the operating cycle, whichever is longer, using existing current assets to through the creation of another current liability.
Current Liability Examples
Accounts Payable, Taxes Payable, Payroll Payable
Social security and Medicare taxes are commonly called FICA taxes. The employee and employer must make equal contributions to Social Security and Medicare. In 2014 the combined total FICA for e/eer is 15.3%. If you are a self employed employer you must pay the whole amount on your own. This is for earnings to $117,000.
Federal unemployment tax is a payroll tax paid solely by the employer. It covers the cost of the unemployeds insurance and job service programs. FUTA and SUTA combined is roughly around 6%.
State unemployment taxes. Differentiated per state. Also paid just by the employer.
Long term Liabilities
Are obligations that a company expects to pay more than one year in the future.
Are obligations that might arise in the future depending on an event within uncertain outcome.
Are an obligation in the form of a written promissory note and can be classified as either a current or long-term liability depending upon when the company must pay the obligation.
Mortgage note payable
is a long term note secured by a mortgage that pledges title to specific units of property as security for the loan.
are a form of interest-bearing notes payable issued by corporations, universities, and governmental entities.
is the amount of principal due at the maturity of a note or bond.
Contractual (stated) interest rate
is the rate used to determine the amount of interest the borrower pays and the investor receives.
Market Interest Rate
is the rate investors demand for loaning funds on a specific date
is the date on which the final payment on a bond or note is due to the investor
is the difference between the face value of a bond and its selling price, when the bond is sold for less than its face value.
is the difference between the face value of a bond and and its selling price, when the bond is sold for more than its face value.
Straight-line method of amortization
is a method of amortizing the bond discount or premium that allocates the same amount of interest expense to each interest period.
Effective-interest method of amortization
is the method of amortizing the bond discount or premium that results in periodic interest expense equal to a constant percentage of the carrying value of the bond.
is the intentional effort by a company to structure its financing arrangements so as to avoid showing liabilities on its books. An example would be to use an operating lease instead of a capital lease arrangement.
time value of money
is the relationship between time and money. a dollar received today is worth more than a dollar promised at some time in the future
the value now of a given amount to be paid or received in the future assuming compound interest.
the interest computed on the principal and any interest earned that has not been paid or withdrawn.
the interest computed on the principal only
present value of annuity
is the value now of a series of future equal receipts or payments, discounted assuming compound interest.
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