Current Liabilities
Quick Study Sheet
Introduction to Accounting
Current Liabilities
Quick Study Sheet
Current – means it is expected to be paid within one year of the balance sheet date
Common Current or Short-erm Liabilities:
Accounts Payable:
Amounts owed to suppliers for goods or services purchased on credit, normally 30 days, no interest charged
Sales Tax Payable:
A tax levied on retail sales.
The business must charge this and collect the money and then pay it to the state or city
Cash $XXXX
Sales revenue $XXXX
Sales Tax Payable $ XX
Unearned Revenues:
Occurs when the company collects money from a customer before providing the goods or services owed to the customer
Short Term Notes Payable:
A written promise to pay an amount borrowed, with interest to be repaid within one year – periodic payments
Payroll Liabilities:
Amounts accessed to the business by the government and amounts taken from employee’s check that must be paid for them
Salary Expense (salary or hours worked x rate per hour)
FICA tax payable
Medicare tax payable
Federal income tax payable
Medical insurance payable
Union dues payable
Pension payable
Salaries payable ** (plug to balance)
Payroll tax expense ** (total of all credits)
FICA/SS tax payable
Medicare tax payable
SUTA payable
FUTA payable
Warranty Liabilities:
The seller’s obligation to replace goods or provide service to defective products within a set period of time (matching principle)
Sales this period x % of warranty historically occurs = warranty expense
Warranty Expense $X,XXX
Warranty liability $X,XXX
Contingent Liabilities:
An obligation that may occur, but is dependent on a future event to happen, for you to know how much will be paid to who.
1) Probable – Record an expense and a liability for the low estimate and disclose
2) Reasonably Possible – Disclose the situation in the footnotes, high and low $
3) Remote – Do nothing, don’t expense or disclose