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Miami, FL, August 5th, 2014
* Liabilities.
As things they will get more complicated, the process of growing
the business will have the same effect. By now “John our client”
was able to establish some credit with his main vendor to
acquire the essential row material needed to finish production.
When someone allows granting extended terms to another company
to pay their bills, gives the opportunity to settle dues over an
“X” period of time. This process creates what we call a
liability. Because instead of withdrawing funds immediately, now
you will create a process called “accounts payable”. Even that
all materials may not get processed into production within the
same accounting period, and all vendor's invoices may not get
paid at once, but as we register these transactions, is when
they will got enter within an specific accounting period of the
company’s books. Synthesizing a liability is a compilation of
amounts due that the company will pay over a specific amount of
time.
Therefore we will do the next entry to register a liability, the
company acquired $500.00 of row material to finish production,
and it will get registered as follows:
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* Fernando Angel
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