Week 4 Discussions
Week 4
Discussion 1 A company's debts or obligations are owed within one year. Current liabilities appear on the company's balance sheet and include short-term debt, accounts payable, accrued liabilities and other debts. Current liabilities are separated from long-term liabilities on classified balance sheets. (You do not have to prepare a classified balance sheet, but it is the norm. Classified balance sheets also separate the current assets from the long-term assets). Knowing which liabilities will have to be paid within one year is important to lenders, financial analysts, owners, and executives of the company. (Current assets include cash and other assets that will turn to cash within one year.) Knowing the liabilities that are due within one year and the amount of assets turning to cash within one year are so important that it makes sense to prepare a classified balance sheet. The amount of current liabilities is used in two of the most common financial ratios. Working capital is the amount of current assets minus the amount of current liabilities. The current ratio is calculated by dividing the amount of current assets by the amount of current liabilities.
S. Wainwright (2012.), Principles of Accounting (Vol. 1). San Diego, CA: Bridgepoint Education.
Discussion 2 A sole proprietorship is a business owned by only one person. The most common form of ownership, it accounts for about 72 percent of all U.S. businesses. It is the easiest and cheapest type of business to form: if you are using your own name as the name of your business, you just need a license to get started, and once you are in business, you are subject to few government regulations. As sole owner, you have complete control over your business. You make all-important decisions, and you are generally responsible for all day-to-day activities. In exchange for assuming all this responsibility, you get all the income earned by the business. Profits earned are taxed on the personal
Discussion 1 A company's debts or obligations are owed within one year. Current liabilities appear on the company's balance sheet and include short-term debt, accounts payable, accrued liabilities and other debts. Current liabilities are separated from long-term liabilities on classified balance sheets. (You do not have to prepare a classified balance sheet, but it is the norm. Classified balance sheets also separate the current assets from the long-term assets). Knowing which liabilities will have to be paid within one year is important to lenders, financial analysts, owners, and executives of the company. (Current assets include cash and other assets that will turn to cash within one year.) Knowing the liabilities that are due within one year and the amount of assets turning to cash within one year are so important that it makes sense to prepare a classified balance sheet. The amount of current liabilities is used in two of the most common financial ratios. Working capital is the amount of current assets minus the amount of current liabilities. The current ratio is calculated by dividing the amount of current assets by the amount of current liabilities.
S. Wainwright (2012.), Principles of Accounting (Vol. 1). San Diego, CA: Bridgepoint Education.
Discussion 2 A sole proprietorship is a business owned by only one person. The most common form of ownership, it accounts for about 72 percent of all U.S. businesses. It is the easiest and cheapest type of business to form: if you are using your own name as the name of your business, you just need a license to get started, and once you are in business, you are subject to few government regulations. As sole owner, you have complete control over your business. You make all-important decisions, and you are generally responsible for all day-to-day activities. In exchange for assuming all this responsibility, you get all the income earned by the business. Profits earned are taxed on the personal