Category: Dictionary

Coupon refers to the rate of interest which is paid to the bond holder by the bond issuer as interest on their principal.

An accounting entry that either increases one’s liability or decreases one’s assets is known as credit. The right side of an account is known as credit side.

Creditor refers to the individual that has to take some benefit or sum of amount from another person or group of persons.

A Creditor can be a person, government agency, or any institution that has to take goods/services or sum of amount from another entity (Debtor).

As per above diagram, “Y“ has to take sum of amount from “X”. Therefore “Y” is creditor of “X”.

Current liabilities are short term debt obligations that a company has to pay within a year. Current assets are used to pay off these liabilities. The amount of total current liabilities, given on the balance sheet, is also used to calculate working capital of a company.

Current liabilities are shown on the liability side on a company’s balance sheet as below:

The excess amount of these liabilities over total current assets indicates the inefficiency of management. Put it simple it shows that management is unable to meet its short term liabilities on time. So, management has to take a good care of the balance between current assets and liabilities.

List of current liabilities:

Below is the detailed list of these liabilities:

• Accounts payable,
• Sales taxes payable,
• Payroll taxes payable,
• Income taxes payable,
• Interest payable,
• Bank account overdrafts,
• Accrued expenses,
• Customer deposits,
• Dividends declared,
• Short-term loans,
• Current maturities of long-term debt etc.

 

Debentures are long term source of raising fund by a company. A debenture is a document that either creates a debt or acknowledges it. Debentures are not collateral i.e. these instruments are not backed up by any security of the company. A fixed percentage of interest is paid on debentures.