What is Current Debt?
Current liabilities refer to debts repaid within a business cycle within 12 months. In theory, current liabilities are closely related to current assets. By comparing the two, we can roughly understand the short-term debt-paying ability and liquidation ability of an enterprise. Current liabilities include: short-term loans, accounts payable, bills payable, wages payable, welfare payables, taxes payable, dividends payable, interest payable, accounts received in advance, accrued expenses, other payables, and other payables. [1]
Current liabilities
Right!
- Current liabilities refer to debts repaid within a business cycle within 12 months. In theory, current liabilities are closely related to current assets. By comparing the two, we can roughly understand the short-term debt-paying ability and liquidation ability of an enterprise. Current liabilities include: short-term loans, accounts payable, bills payable, wages payable, welfare payables, taxes payable, dividends payable, interest payable, accounts received in advance, accrued expenses, other payables, and other payables. [1]
- Current liabilities mainly include
- Sources of current liabilities and the nature of current liabilities resulting from financing activities such as:
- Current liabilities
- 1. Meet the definition of current liabilities.
- 1. Theoretically, the valuation of liabilities should be based on
- Accounting of bills payable
- Issue of notes payable
- Current liabilities
- Current liabilities
- When paying the acceptance fee to the bank, debit the "financial expense" account and credit the "bank deposit" account. 2. Withdrawal of interest on notes
- If the company issues an interest-bearing commercial bill of exchange, it should accrue interest payable at the end of the interim period or the end of the year, debit the "financial expense" account, and credit the "notes payable" account. :
- 3 Notes payable due
- When the bank note is received when the bill is due, if it is a non-interest-bearing bill, it should be debited to the "notes payable" account and credited to the "bank deposit" account; if it is an interest-bearing bill, the book value should be Debit the "Payables Payable" account, debit the "financial expenses" account, and debit the "Bank Deposit" account at the amount actually paid.
- If the enterprise is unable to pay the due bills of commercial acceptance bills, debit the "notes payable" account and credit the "accounts payable" account based on the book value of the bills payable; if the company is unable to pay the bank acceptance bills due, then When receiving the voucher such as the notice that the bill of exchange is not paid and transferred to the overdue lender, debit the "Payables Payable" account and credit the "Short-term Loan" account. Interest-bearing bills are incapable of being paid at maturity, and no longer accrued after transfer to relevant subjects.
- Current liabilities
- Accounting of accounts payable
- l. Account payable time
- An enterprise that purchases goods or accepts services shall be the account time of the accounts payable when the ownership of the goods has been transferred or the acceptance of services has occurred. In actual work, if the purchased goods and invoices are received at the same time, the accounts payable should be confirmed after the goods are checked and accepted in the eight warehouses. If the purchased goods have been received but the invoice has not been received at the end of the due date, a provisional account payable should be confirmed so that a balance sheet reflects a received asset and corresponding liabilities at the beginning of the next period The assets and liabilities recognized based on the temporary estimates are written back.
- 2. Accounts payable
- Under normal circumstances, accounts payable are recorded at the actual transaction amount. In the case of cash discounts, there are two methods for determining the amount of accounts payable: total price method and net price method. Using the total price method, accounts payable are recorded at the transaction amount without deducting cash discounts. With the net price method, accounts payable are calculated at the transaction amount after deducting cash discounts. The general price method is generally used in Chinese accounting practice. That is, when there is a cash discount, when the company pays accounts payable, it debits the relevant account and credits the "accounts payable" account based on the actual transaction amount; when paying during the discount period, the cash discount obtained is used as a financial income To deduct financial expenses, debit the "Accounts Payable" account based on the original amount payable, credit the "Bank Deposit" account based on the amount actually paid, and credit the "financial expense" account based on the cash discount obtained. If payment is made after the discount period, the "Accounts Payable" account will be debited and the "Bank Deposit" account will be credited based on the original payable amount.
- Example: Huaan Company purchased a batch of materials on a certain month on the 8th with a price of 50,000 yuan and a value-added tax of 8,500 yuan. The payment terms are 10 days to pay a 2% discount on the price. Based on the above information, the accounting entries are as follows (calculated by the total price method):
- (1) On the 8th, the materials arrived and checked into the inventory.
- Borrow: Raw materials 50000
- Tax payable-VAT payable (input tax) 8500
- Credit: Accounts payable 58500
- (2) Payment on the 16th
- Payment amount = 58500-50000 × 2% = 57500
- Borrow: Accounts payable 58500
- Loan: bank deposit 57500
- Finance costs 1000
- Current liabilities
- Accounting for advances and other payables
- 1. Account received in advance refers to the amount received in advance from the purchase unit in accordance with the contract. Enterprises with advance receipts business should generally set up a "Accounts In Advance" account for accounting purposes. When receiving advances, debit the "Bank Deposit" account and credit the "Accounts in Advance" account; when the sales of advance receipts are realized, debit the "Accounts in Advance" account and credit the "Main Business Income" and "Payable Accounts" Taxes-Subject to Value Added Tax (Output Tax). When replenishing money, debit the "Bank Deposit" account and credit the "Advance Account" account; when returning overcharged money, make the opposite accounting entry. For enterprises with less advance receipt business, they may not set up the Accounts Receivable account in advance, and credit the advance receipts to the Accounts Receivable account.
- 2. Other payables refer to other payables and temporary receivables other than bills payable, accounts payable and accounts received in advance, including rents payable to operating tenants for fixed assets and packaging, deposits for deposits, and wages not received by employees Wait. When various other payables and temporary receivables occur, debit "bank deposits", "administrative expenses" and other subjects, and credit "other payables" subjects; when paying, debit "other payables" subjects, credit " Bank deposits ".
- Accounting for short-term borrowings
- When an enterprise borrows various short-term loans, it debits the "bank deposit" account and credits the "short-term loan" account. If the loan interest payment period is long (such as quarterly), interest can be withheld. When short-term loan interest is withdrawn, debit the "financial expenses" account and credit the "earned expenses" account. When repaying short-term loan interest, debit subjects such as "withholding expenses" and "financial expenses", and credit subjects such as "bank deposits". When returning short-term loans, debit the "Short-term Loan" account and credit the "Bank Deposit" account.
- Accounting of payables
- In order to strengthen the management of the total wages of employees, enterprises should set up "payable payable" subjects, accounting for various wages, bonuses, allowances, etc. of the total wages of enterprise employees. Amounts that are not included in total wages and are issued to employees, such as medical expenses, welfare subsidies, retirement expenses, etc., are not counted in the "Payable Payables" account. The total wages for a certain period should be equal to the total amount of debit balances in the corresponding period of the "Payable Payable" account. Each department of the enterprise shall compile a "salary slip" based on the time and attendance records and output records. The financial department summarizes the "salary slips" on a monthly basis and compiles a "salary summary sheet" for accounting processing of the payment and distribution of wages. When paying wages, debit "Payable Payable" and credit "Cash". Various deductions from payable wages (such as housing rent, family medicines, personal income tax, etc.), debit the "payable payable" account, credit "other receivables", "tax payable-should be Pay personal income tax "and other subjects. When the employee does not receive the salary within the stipulated period, he shall debit the "cash" account and credit the "other payables" account. At the end of the month, the salary expenses of this month will be allocated for accounting treatment: according to the wages of production and management personnel (including cooks and union workers), debit the "production costs", "manufacturing costs", and "administrative expenses" subjects. , Debit the "operating expenses" account according to the salary of the staff of the special sales agency, debit the "construction in progress" account according to the salary of the construction in progress, debit the "benefits payable" account according to the salary of the medical and welfare personnel, Based on the total payable wages, credit the "Payable Payable" account.
- Under normal circumstances, an enterprise allocates wages payable this month as payable wages, and there should be no balance at the end of the "Payable Payables" account. If there is a large difference in total wages between months, the company will pay wages based on the attendance record of the previous month and allocate payable salaries based on the attendance record of the current month, and the difference between the two will be the ending balance of the "payable payable" account. If the payable wages not caused by the above reasons are greater than the actual payable wages, the credit balance of the "Payable Payables" account reflects the balance of wages.
- Current liabilities
- Accounting of benefits payable
- The welfare fee payable is the funds that the enterprise draws from the cost (or the net profit of the foreign-invested enterprise) and is used to pay employees' medicine, welfare and medical welfare personnel, or non-recurring bonuses paid by employees to foreign-funded enterprises. The current system stipulates that employee benefits are drawn at 14% of total wages. The cost of drawing various types of personnel welfare expenses is basically the same as the cost of each type of personnel. When withdrawing welfare fees, debit subjects such as "production costs", "manufacturing expenses", "administrative expenses", "operating expenses", and "projects under construction", and credit the subjects of "benefits payable". When paying and using the welfare fee, debit the account of "Welfare Payable" and credit the subjects of "Cash", "Bank Deposit", "Payable Payable" and so on.
- Accounting for other payables
- Other payables refer to various payables other than taxes payable. Enterprises should set up "other payables" subjects to account for education surcharges payable, mineral resources compensation fees, and housing provident fund payable.
- According to the payable education surcharge, mineral resources compensation, housing provident fund, debit "main business tax and surcharge", "other business expenses", "administrative expenses" and other subjects, credit "other payables- Pay education surcharge, pay mineral resources compensation, pay housing provident fund "subjects. When paying, debit the account of "Other payables-education surcharge payable, mineral resource compensation payable, housing fund payable", and credit the "bank deposit" account.