LIABILITIES AND EQUITIES

Liability- An obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed. For example, if John hits Jane's car, John is liable for the damages to Jane's vehicle because John is responsible for the damages. In the case of a company, a liability is recorded on the balance sheet and can include accounts payable, taxes, wages, accrued expenses, and deferred revenues. Current liabilities are debts payable within one year, while long-term liabilities are debts payable over a longer period. Current LiabilityObligations such as deferred dividend, trade credit, and unpaid taxes, arising in the normal course of a business and due for payment within a year. Also called current debt. Accounts Payable (trade)- Liabilities owed to suppliers for purchases or services rendered . More commonly referred to as accounts payable. future dates, classified as current (if due within 12 months) or non-current (if due after 12 months) of the balance sheet date. Accrued payable-A liability account that reflects the estimated amount a company owes for expenses that occurred, but have not yet been paid nor recorded through a routine transaction. Accrued tax- Tax incurred on the income-todate, but which is to be paid at the end of the accounting period.

Accrued vacation- The amount owed to employees as of a specified date for the amount of vacation pay that has been earned but has not been taken. For example, the accrued vacation pay as of December 31, 2012 is the amount the employees have earned as of December 31, 2012 but have not taken as of that date. The employees might take the vacation time during 2013 or they might be paid the amount in 2013.

Accounts receivable- Money which is owed to a company by a customer for products and services provide d on credit. This is often treated as a current asset on a balance sheet. A specific sale is generally only treated as an account receivable after the customer is sent an invoice.

Other current liabilities- A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable.

"Billings in excess of costs and profits"- is a term used in financial accounting to refer to situations in which the amount invoiced to the customer exceeds the revenues that have actually been earned. Until those revenues are earned, they are carried as liabilities on the companys accounting books. This type of overbilling situation usually occurs in industries where it is common to bill for services in advance, such as in construction. Notes payableWritten promises to pay stated sums of money at

Total current LiabilitiesThe sum of a company's accounts payable, accrued salaries payable, payroll taxes paya ble, long-term debt, and other accrued liabilities.

Long term Liabilities- In accounting, a section of the balance sheet that lists obligations of the company that become due more than one year into the future. Long-term liabilities include items like debentures, loans, deferred tax liabilities and pension obligations. The portions of long-term liabilities that will come due within the next 12 months are listed under current liabilities, such as the current portion of long-term debt

Total Liabilities- The aggregate of all debts an individual or company is liable for. Total liabilities can be easily calculated by summing all of one's short-term and long-term liabilities, along with any off balance sheet liabilities which corporations may incur. On the balance sheet, total liabilities plus equity must equal total assets.

the current accounting

period

Total Equity- The total amount of preferred stock equity added to the amount of common stock equity.

Owners Equity- Owners' Equity is the combined investments of the owner(s) and the accumulation of profit or losses for the business since it began.

Owner's Equity (Net Worth) is expressed in the following accounting formula:

Net Worth = Assets - Liabilities

CAPITAL STOCK- The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents the size of the equity position of a firm and can be found on the balance sheet (or notes) of a typical financial statement. Firms can both issue more capital stock, or buyback shares that are currently owned by shareholders. Retained Earnings- The percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders' equity on the balance sheet. The formula calculates retained earnings by adding net income to (or subtracting any net losses from) beginning retained earnings and subtracting any dividends paid to shareholders:

RE=BEGINNING RE + NET INCOME-DIVIDENDS Also known as the "retention ratio" or "retained surplus".

Current period net income- This refers to what is currently held as profit earned during