Current Portion of Long Term Debt

The current portion of long term loan or long term debt is a current liability. It is the amount of debt principal repayable within 12 months of the balance sheet date. The current portion of long-term debt is not the same as short term debt.

Last modified November 7th, 2019 by Michael Brown
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Bills of Exchange in Accounting

Bills of exchange can be used when credit terms are offered by a business to a customer. The bill is a transferable document which when accepted, indicates agreement by the buyer that the amount of the bill is payable on a particular date.

Last modified July 16th, 2019 by Michael Brown
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Goods Received Not Invoiced

A business operating a perpetual inventory system needs to record goods received into inventory even if it has not yet received an invoice from its supplier. Since the liability cannot be posted to the accounts payable account, a temporary posting is made to the goods received not invoiced account.

Last modified December 19th, 2019 by Michael Brown
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Extended Warranty Accounting

In addition to the standard warranty, businesses often sell an extended warranty for an additional fee. Revenue from the sale of extended warranties is recognized on a straight line basis over the term of the warranty.

Last modified January 13th, 2020 by Michael Brown
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Warranty Costs

Manufacturer warranty costs are both probable and subject to reasonable estimation and therefore create a contingent liability which a business needs to include in its financial statements.

Last modified December 20th, 2019 by Michael Brown
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Accounting For Gift Cards

Gift cards accounting involves establishing a liability for the obligation to provide goods at a future date. A customer can redeem gift cards and the liability is reduced due to gift card revenue recognition. Not all gift cards are redeemed and the business needs to estimate the revenue (breakage) to be released proportionately as other gift card balances are redeemed by customers.

Last modified March 1st, 2021 by Michael Brown
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Accrued Expenses Example

Accrued expenses are expenses which has been incurred but not yet recorded in the accounting ledgers at the end of the accounting period.

A business has an annual premises rent of 12,000 but an invoice has not been received from the landlord and the rental expense has not been recorded in the accounting records.

Last modified November 22nd, 2019 by Michael Brown
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