University Of Gujrat(uog)

Accounting ppt.

Submitted to:

Sir, Yasir Nadeem

Group Member:

FARHAN RIAZ 19811556-028

SHAFIQUE ZAMAN 19811556-030
MOIZ SHA 19811556-023
SIMAB AHMED 19011556-132
AMEER SIKANDER 19011556-104

Content:

Liabilties of Orgnization:
1 The nature of :Libilties
2 Account Payable
3 Notes Payable
4 Notes Payable
5 Notes Payable with intrest charges

Libilties Of Orgnization:

What is nature libilties?

A liability is something a person or company owes, usually a sum of money. Liabilities are

settled over time through the transfer of economic benefits including money, goods, or
services .

Types of libilties:

There.are three types of liabilties:

 Current liabilities
 Non current libilties
 Contingent libilties

What is current liabilities?

Current liabilities are a company's short-term financial obligations that are due within one
year or within a normal operating cycle. ... An example of a current liability is money owed to
suppliers in the form of accounts payable.

What is non-current liabilties?

Noncurrent liabilities, also known as long-term liabilities, are obligations listed on the

balance sheet not due for more than a year. ... Examples of noncurrent liabilities include
long-term loans and lease obligations, bonds payable and deferred revenue.

What is contigent liabilities?

 A contingent liability is a liability or a potential loss that may occur in the future depending on
the outcome of a specific event. ... In that case, the company would book that amount
as contingent liability on its balance sheet.

What is Account Payable?

 When a company purchases goods on credit which needs to be paid back in a short period of
time, it is known as Accounts Payable.

Example:

if a business received an invoice from its cleaning materials supplier for $100, the entry would look as
follows:

Assets L&E
Purchase of cleaning material of
credit Cleaning 100.0Accounts 100.0
Materials Payables

Once the business has paid the creditor, the entry would be:

Assets L&E
Payment of invoice (100.0)Accounts
Cash
Payable

What is notes payable?

A note payable is a liability in writing that promises to pay a specific amount of money at future
date or on demand. In other words, a note payable is a loan between two entities.

Is Notes Payable Debit or Credit?

Notes Payable is a liability (debt) account that normally has a credit balance. When money is
borrowed from the bank, the accountant will debit the Cash account to reflect the increase in
the amount of cash and credit the Notes Payable account to show the corresponding debt.
Example:

John borrows $100,000 from Michelle on January 1, 2017. John signs the note and
agrees to pay Michelle $100,000 six months later (January 1 through June 30).
Additionally, John also agrees to pay Michelle a 15% interest rate every 2 months.

The journal entries would be as follows:

 
Notes Payable with Intrest charges:
The balance in Notes Payable represents the amounts that remain to be paid. Since a note
payable will require the issuer/borrower to pay interest, the issuing company will have interest
expense. Under the accrual method of accounting, the company will also have another liability
account entitled Interest Payable.

What is intrest payable?

Interest payable is the amount of interest the company has incurred but has not yet paid
as of the date of the balance sheet. Interest Payable is also the title of the
current liability account that is used to record and report this amount.

Simle Intrest Calculate:

Example:

The second offer that Sarah has received is to borrow a principal amount P = $2,000, at an annual rate
of 7%, over t = 1 year. The rate r must be converted from a percentage into decimal form, which means
that we divide the percentage value 7% by 100 to get r = 0.07.

We now calculate the amount of interest Sarah would be charged if she accepts the loan offer just
described:

I = Prt = 2000*0.07*1 = $140.

Differ between Accrued Intrest & Due intrest?

Accrued interest  the amount of loan intrest that has already occurred but has not yet been
paid by the borrower and not yet received by the lender.

Due Intrest The intrest we have earn and we can take it also because its time has been
compelled.