Professional Documents
Culture Documents
Account
Account
pay within a year. These are short-term liabilities. For example, trade creditors. Trade
Creditors are the suppliers from whom we purchase the goods on credit. Usually, the
payment to trade creditors is made within one year.
Short-term notes payable: Notes due in full less than 12 months after
the balance sheet date are short term. For example, a business may
need a brief influx of cash to pay mandatory expenses such as payroll.
A good example of this situation is a working capital loan, which a bank
makes with the expectation that the loan will be paid back from
collection of accounts receivable or the sale of inventory.
Principal means main part of the loan.). Actually, it resembles individual’s car lease,
whereby at the end of the lease period the lessee (who purchased the property on lease)
becomes its legitimate owner. Thus, the company having eventually paid up for the asset
leased, will become its legitimate owner.
Securities are freely tradable debt instruments that are backed by company’s assets. Shares
of stock are a common type of marketable securities.
Notes payable are written promises to pay to the creditor. Oftentimes, they are based on
the reciprocal trust of the both parties, and may not have any backing with corporate assets.
Thus, they merely serve as promises to pay, and as such can also be called promissory notes.
Mortgage means any loan taken for purchasing some real estate. Ordinarily, it is also repaid
over a long period of time and, thus, carried on the balance sheet as a non-current liability.
Accounts payable. These are the trade payables due to suppliers, usually as evidenced by
supplier invoices.
Sales taxes payable. This is the obligation of a business to remit sales taxes to the
government that it charged to customers on behalf of the government.
Payroll taxes payable. This is taxes withheld from employee pay, or matching taxes, or
additional taxes related to employee compensation.
Income taxes payable. This is income taxes owed to the government but not yet paid.
Interest payable. This is interest owed to lenders but not yet paid.
Bank account overdrafts. These are short-term advances made by the bank to offset any
account overdrafts caused by issuing checks in excess of available funding.
Accrued expenses. These are expenses not yet payable to a third party, but already incurred,
such as wages payable.
Customer deposits. These are payments made by customers in advance of the completion of
their orders for goods or services.
Dividends declared. These are dividends declared by the board of directors, but not yet paid
to share holders.
Short-term loans. This is loans that are due on demand or within the next 12 months.