Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Other current liabilities, in financial accounting, are categories of short-term debt that are lumped together on the liabilities side of the balance sheet. The term "current liabilities" refers to items of short-term debt that a firm must pay within 12 months.
To that, companies add the word "other" to describe those current liabilities that are not significant enough to identify separately on their own lines in financial statements, so they are grouped together as "other current liabilities. Other current liabilities may be contrasted with other current assets , found on the assets side of the balance sheet. Before you can understand the concept of other current liabilities, you must know what the term current liabilities means.
Other current liabilities are simply current liabilities that are not important enough to occupy their own lines on the balance sheet, so they are grouped together. The current liabilities section of the balance sheet lists the debt obligations that a company must pay within 12 months, as opposed to long-term liabilities , which a company may pay down over time.
Therefore, a shareholder receives a dividend in proportion to the shares he owns — for example, if shareholder Y owns shares when company Z declares a dividend of USD 1. Dividends are considered a form of passive income for investors. For the company, a dividend payment is not an expense, but the division of after tax profits among shareholders. The per share dividend amount is multiplied by the number of shares outstanding and this result is debited to retained earnings and credited to dividends payable.
On the declaration date, the Board announces the date of record and a payment date; the payment date is the date when the funds are sent to the shareholders and the dividends payable account is reduced for the payment amount. A deferred revenue is recognized when cash is received upfront for a product before delivery or for a service before rendering. A deferred item, in accrual accounting, is any account where a revenue or expense, recorded as an liability or asset, is not realized until a future date accounting period or until a transaction is completed.
Examples of deferred items include annuities, charges, taxes, income, etc. If the deferred item relates to an expense cash has been paid out , it is carried as an asset on the balance sheet. If the deferred item relates to revenue cash has been received , it is carried as a liability.
A deferred revenue is specifically recognized when cash is received upfront for a product before delivery or for a service before rendering. In these cases, the earnings process is not complete when the cash is received, so the cash is recorded as a liability for the products or services that are due to the buyer.
Receipts for magazine subscriptions are a type of deferred revenue. An example of a deferred revenue is the monies received for a month magazine subscription. The proceeds on the subscription relate to a future benefit magazine for the buyer that he will receive over the course of 12 months.
Since the seller has received full payment for all 12 issues that will be delivered over the course of the year, the payment is recorded as unearned or deferred revenue in the current liability section of the balance sheet.
If cash received is for benefits that extend past the current accounting period, a long-term liability would be recorded instead. Other current liabilities reported on the balance sheet are sales tax, income tax, payroll, and customer advances deferred revenue. Explain how sales tax payable, income tax payable, salaries and wages payable and deferred revenue appear on the financial statements.
The sales and use tax is a tax paid to a governing body by a seller for the sales of certain goods and services. The payment of the tax by the seller occurs periodically and varies depending on the jurisdiction.
Usually laws allow or require the seller to collect funds for the tax from the consumer at the point of purchase. Laws may allow sellers to itemized the tax separately from the price of the goods or services, or require it to be included in the price tax-inclusive. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale. Sales tax payable can be accrued on a monthly basis by debiting sales tax expense and crediting sales tax payable for the tax amount applicable to monthly sales.
The sales tax payable account is reported in the current liability section of the balance sheet until the tax is paid. A company can incur different types of tax liabilities. Income tax is a tax levied on the income of individuals or businesses corporations or other legal entities.
Corporate tax refers to a direct tax levied on the net earnings made by companies or associations and often includes the capital gains of a company.
Net earnings are generally considered gross revenue minus expenses. Expenses can vary; for example, corporate expenses related to fixed assets are usually deducted in full over their useful lives by using percentage rates based on the class of asset to which they belong. Accounting principles and tax rules about recognition of expenses and revenue will vary at times, giving rise to book-tax differences.
If the book-tax difference is carried over more than a year, it is referred to as a deferred tax. Future assets and liabilities created by a deferred tax are reported on the balance sheet. Income tax payable can be accrued by debiting income tax expense and crediting income tax payable for the tax owed; the payable is disclosed in the current liability section until the tax is paid.
Wages and salaries in cash consist of wages or salaries payable at regular weekly, monthly, or other intervals, including payments by results and piecework payments, plus allowances like:. Deferred revenue is, in accrual accounting, money received for goods or services that have not yet been delivered and revenue on the sale has not been earned. According to the revenue recognition principle, the deferred amount is recorded as a liability until delivery is made, at which time it is converted into revenue.
An example of a typical customer advance is the receipt of an annual maintenance contract fee, where the entire contract is paid up front. In short, working capital is the money available to meet your current, short-term obligations. Your net working capital tells you how much money you have readily available to meet current expenses.
For these calculations, consider only short-term assets such as the cash in your business account and the accounts receivable — the money your customers owe you — and the inventory you expect to convert to cash within 12 months. Short-term liabilities include accounts payable — money you owe vendors and other creditors — as well as other debts and accrued expenses for salary, taxes and other outlays. Getting a true understanding of your working capital needs may involve plotting month-by-month inflows and outflows for your business.
A landscaping company, for example, might find that its revenues spike in the spring, then cash flow is relatively steady through October before dropping almost to zero in late fall and winter. Yet on the other side of the ledger, the business may have many expenses that continue throughout the year. Liabilities are disclosed in a separate section that distinguishes between short-term and long-term liabilities. Short-term, or current liabilities, are listed first in the liability section of the statement because they have first claim on company assets.
Current liabilities are typically due and paid for during the current accounting period or within a one year period. They are paid off with assets or other current liabilities.
Most current liabilities have a claim on cash or other assets. For many companies, accounts payable is the first balance sheet account listed in the current liabilities section. For example, accounts payable for goods, services, or supplies that were purchased with credit and for use in the operation of the business and payable within a one-year period would be current liabilities.
Accounts payable are typically due within 30 days. Amounts listed on a balance sheet as accounts payable represent all bills payable to vendors of a company, whether or not the bills are more or less than 30 days old. Therefore, late payments are not disclosed on the balance sheet for accounts payable. An aging schedule showing the amount of time certain amounts are past due may be presented in the notes to audited financial statements; however, this is not common accounting practice.
In addition to current liabilities, long-term liabilities are listed in a separate section after current debt. Long-term liabilities can include bonds, mortgages, and loans that are payable over a term exceeding one year.
However, for all long-term liabilities, any amounts due in the current fiscal year are reported under the current liability section. The balance sheet lists current liability accounts and their balances; the notes provide explanations for the balances, which are sometimes required.
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership, a corporation, or other business organization, such as an LLC or an LLP. Assets, liabilities, and the equity of stockholders are listed as of a specific date, such as the end of a fiscal year or accounting period.
Current liabilities and their account balances as of the date on the balance sheet are presented first, in order by due date. The balances in these accounts are typically due in the current accounting period or within one year. Current liabilities can represent costs incurred for employee salaries and wages, production and build up of inventory, and acquisition of equipment which are needed and used up during normal business operations.
Current liability information found in the notes to the financial statements provide additional explanation on the liability balances and any circumstances affecting them. Accounting principles can sometimes require the disclosure of specific information for the benefit of the financial statement user.
For example, companies that pay pension plan benefits require additional footnote disclosure that provide the user with additional details on pension costs and the assets used to fund it. Contingencies are reported as liabilities if it is probable they will incur a loss, and their amounts can be reasonably estimated. The past obligating event defines a future payment event as a payment due on a specific date from the company, who is linked to an obligating event by a specific agreement.
Funds may be lost due to contingent liabilities. A probable loss contingency can be measured reliably if it can be estimated based on historical information. Car Repairs : Cars require regular maintenance.
Such contingent liabilities can be estimated reliably based on historical cost and readily available information.
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