Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition

Chapter 3

Digging for Debt in the Balance Sheet

IN THIS CHAPTER

Defining current liabilities

Understanding the impact of payroll and taxes

Finding out about long-term debt

Accounting for bonds

It's a common misconception that being in debt is a bad thing. If you're using the money that you've borrowed in some way that generates a profit, though, then that's definitely a form of healthy debt. After all, nearly all businesses need to borrow money in order to acquire assets and fund operations.

This chapter covers both current and long-term debt, collectively known as liabilities. You discover the types of current liabilities that help a business manage its day-to-day operations. You also find out about long-term debt obligations that businesses use to acquire assets. Here, we discuss basic long-term debt — such as mortgages and notes payable — and bonds, focusing on the many facets of this complicated topic. A third type of liability — loss contingencies — also gets some space in this chapter. These liabilities aren’t always included in financial accounting reports; you get the lowdown ...