In the previous 25 lessons I covered a lot of different terms and this lesson is merely a summary of the various terms a bookkeeper encounters.
‘Liabilities’ is a section in the lower half of the balance sheet reflecting all forms of accounts payable and debt. Normal presentation divides the liabilities into short-term (less than one year) and long-term liabilities (amounts due after one year).
To fully grasp the concept of accounting a bookkeeper must accept that there are six (6) different types of accounts. All the reports, ledgers, journals and entries revolve around these six types of accounts. Bookkeeping is the function of entering data based on the economic transaction into the respective type of account.
Long Term Debt is one of the multiple forms of capitalizing a business. It includes bonds, secured notes and mortgage notes. In the world of small business, the most common form of long term debt is secured notes, most likely with recourse. As an owner of a business you need to understand how this information is presented in your financial statements.