Notes receivable An asset representing the right to receive the principal amount contained in a written promissory note. Principal that is to be received within one year of the balance sheet date is reported as a current asset. Any portion of the notes receivable that is not due within one year of the balance sheet date is reported as a long term asset. Monthly accounting times » Financial Systems, Monthly Closing Process, Revenue Recognition & More The goal of any organization should be the ability to produce timely and accurate financial statements within a reasonable period of time after the month has ended. The financial statements are critical to management in their ability to understand the financial health of the organization and allow management the opportunity to make decisions in a timely manner. Prepaid tent A current asset account that reports the amount of future rent expense that was paid in advance of the rental period. The amount reported on the balance sheet is the amount that has not yet been used or expired as of the balance sheet date. Prepaid insurance A current asset which indicates the cost of the insurance contract (premiums) that have been paid in advance. It represents the amount that has been paid but has not yet expired as of the balance sheet date. A related account is Insurance Expense, which appears on the income statement. The amount in the Insurance Expense account should report the amount of insurance expense expiring during the period indicated in the heading of the income statement. Bonds payable Generally a long term liability account containing the face amount, par amount, or maturity amount of the bonds issued by a company that are outstanding as of the balance sheet date. Notes payable The amount of principal due on a formal written promise to pay. Loans from banks are included in this account. Interest payable This current liability account reports the amount of interest the company owes as of the date of the balance sheet. (Future interest is not recorded as a liability.) Utilities payable A current liability account that reports the amounts owed to the utility companies for electricity, gas, water, phone as of the date of the balance sheet. If a utility bill has not been received, the company will have to estimate the amount owed for the service it has used up to the balance sheet date. Instead of using a separate account for utilities payable, the amounts owed are often included in Accounts Payable. A loan is an arrangement under which the owner of property (usually cash) allows another party the use of the property in exchange for an interest payment and the return of the property at the end of the lending arrangement. The loan is documented in a promissory note. If the loan is still payable as of the date of a companys balance sheet, the remaining balance on the loan is called a loan payable Mortgage payable The long‐term financing used to purchase property is called a mortgage. The property itself serves as collateral for the mortgage until it is paid off. A mortgage usually requires equal payments, consisting of principal and interest, throughout its term. The early payments consist of more interest than principal. Over the life of the mortgage, the portion of each payment that represents principal increases and the interest portion decreases. This decrease occurs because interest is calculated on the outstanding principal balance that declines as payments are made. Legal fees You can deduct reasonable accounting fees you paid for help to prepare and file your income tax and benefit return. You can deduct legal fees you paid in the year to collect or establish a right to collect salary or wages. Under proposed changes, you can also deduct legal fees you paid in the year to collect or establish a right to collect other amounts that must be reported in employment income even if they are not directly paid by your employer. However, you must reduce your claim by any amount awarded to you for those fees or any reimbursement you received for your legal expenses. You do not have to meet the conditions of a commission employee to deduct legal fees. Open account An unpaid or unsettled account; an account with a balance that has not been ascertained, that is kept open in anticipation of future transactions. A type of credit extended by a seller to a buyer that permits the buyer to make purchases without a note or security and is based on an evaluation of the buyers credit. A contractual obligation that may be modified by subsequent agreement of the parties, either by expressed consent or by consent implied from the conduct of the parties, provided the agreement changing the contractual obligation is based upon independent consideration. Residual equity An accounting concept that says that common stockholders take the greatest risk when they buy into a company; therefore, they should have sufficient information about the companys financial standing and performance to make sound investment decisions. Residual equity is calculated by subtracting the claims of bondholders and preferred shareholders from the companys total assets.
Posted on: Sun, 03 Nov 2013 14:05:14 +0000
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