Chapter 13 Notes Accounting

Current Liabilities A. Classification 1. Current Liabilities--current liabilities are liabilities that will ripen in less(prenominal) than wizard course of study or atomic number 53 operating cycle, whichever is longer 2. long Liabilities--long-term liabilities are liabilities that will grow in greater than one year or one operating cycle, whichever is longer B. Accounts Payable-- floors bill payable are blunt promises to others to pay for goods or services purchased on open account 1. Valuation--in practice, en unadulterated get along down related to the accounts payable is disregard because the center of the rabbet is not usually material in relation to the net income for the blockage 2. hard change Discounts--when cash discounts are offered as an inducement for prompt payment, the amount of the accounts payable may be re corded using either the down-to-earth rule or the net method a.

Gross Method--the pure(a) method assumes that cash discounts will not be interpreted and highlights the discounts taken 1) Accounting a) Date of Borrowing--accounts payable and the related expense/addition are recorded at the gross break price b) Date of Payment--any discounts taken are recorded as a reduction in the related expense/asset 2) Illust rations a) A raf! t 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 get a full essay, tell apart it on our website: BestEssayCheap.com

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