Liability account

Of the accounts considered in the preceding illustrations, the plant-equipment and bank accounts are asset accounts, and the sales account is a liabihty account. To increase an asset, debit the asset account to increase a hability, credit the liability account. Conversely, to decrease an asset, credit the asset account to decrease a liability, debit the liabihty account. 

Current liabilities Accounts payable Line of credit—Wells Fargo Payroll taxes payable Sales tax payable Federal income tax pay—current State income tax pay—current Total current liabilities Noncurrent liabilities Note payable Loan payable... 

Current Assets Cash 24,800 Current Liabilities Accounts payable 1,350... 

Periodically, perhaps on a monthly basis but certainly yearly, the ledger sheets are closed and balanced. The ledger sheets are used as intermediate documents between journal records and balance sheets, income statements, and retained earnings statements, as well as information for various government reports. For example, a consolidated income statement can be prepared from the ledger revenue and expense accounts. From the asset and liability accounts, a company s balance sheet is prepared. Table 3.2 is the ledger obtained from the general journal. Table 3.1. 

A ledger. Table, 3.2, was set up containing the necessary accounts to record the transactions of January 1, 20XX. Again, the number of accounts in the ledger depends on the information required by management to make decisions. Initially, Delchem, Inc. requires only asset and liability accounts. However, as the firm grows, more accounts will be established as necessary to record the business transactions. 

Current Liabilities Accounts Payable Notes Payable Accrued Expenses Payable Federal Income Taxes Payable Total Current Liabilities... 

Rarely, all of the information needed for analysis is made obvious on the balance sheet, income statement, or statement of cash flows. Instead, it may require closer examination to find the necessary information. The numbers reported in the financial statements may not be exactly what is needed for financial analysis and day-to-day decision making by those in supply chain and operations because of the assumptions made by a company s financial experts. Accountants have the liberty to make assumptions based on historical trends when preparing financial statements. Examples of these assumptions include the amount of accounts receivable will not be collected, or what liabilities exist, such as tax, pension, and legal liabilities. Accountants also make assumptions about how to value tangible assets, how to value brand and intangible assets, and an amount to allocate to goodwill. As a result of these assumptions, financial results can vary widely. 

A second type of lease exists a capital lease. It simulates ownership and forces the company to show the asset on the balance sheet through the asset and liability accounts. A company using a leased asset tries to have the lease classified as an operating lease rather than as a capital lease to keep the lease obligation off the balance sheet. Certain criteria must be met before a company can classify a lease as an operating lease. Although this is beyond the scope of the book, it... 

An income statement such as the one shown in Table 9-16 is used to obtain the profit or loss for a given period. The debit and credit balances of all the accounts that do not represent expenditure or income for a given accounting period are entered as assets and liabilities in a balance sheet such as that shown in Table 9-17. 

Similarly, the distinction between current and long-term liabihties is also not clear-cut. Current liabilities include accounts payable (money owed to creditors), taxes payable, dividends payable, etc., if due within a year. Long-term liabihties include deferred income taxes, bonds, notes, etc., that do not have to be paid within a year. The owners equity includes the par, or face, value of the capital received from stockholders and any retained earnings. The balance sheet shows only the nominal value and not the current or real value of this capital. 

A typical management accountant s statement for changes in working capital and sources and applications of funds is shown in Table 9-34. This is based on the following relation an increase in apphcation of funds equals an increase in sources of funds. The relation can also be expressed as follows an increase in assets plus a decrease in habil-ities equals an increase in liabilities plus a decrease in assets. 

The life of the product- access to the records will probably not be needed for some considerable time, possibly long after the contract has closed. On defense contracts the contractor has to keep records for up to 20 years and for product liability purposes, in the worst case situation (taking account of appeals), you could be asked to produce records up to 17 years after you made the product. 

Because the number of data points is low, many of the statistical techniques that are today being discussed in the literature caimot be used. While this is true for the vast majority of control work that is being done in industrial labs, where acceptability and ruggedness of an evaluation scheme are major concerns, this need not be so in R D situations or exploratory or optimization work, where statisticians could well be involved. For products going to clinical trials or the market, the liability question automatically enforces the tried-and-true sort of solution that can at least be made palatable to lawyers on account of the reams of precedents, even if they do not understand the math involved. 

Third, the new approach allows the simultaneous planning and optimization of production processes. Where LP or MILP alone breaks the planning problem into disconnected models and solves each independently, the quant-based method works simultaneously, identifying an optimal distribution of capacity while taking into account optimal production sequences and respecting all key constraints in the system. Target objectives are flexible and can be delivery liability, lowest cost production and so forth. 

These results suggest that the taxon is overinclusive It includes 28% of low-risk participants—instead of the 10% predicted by Meehl s theory—and misses some cases that later become symptomatic. This might mean that the identified taxon is not isomorphic with specific genetic liability for schizophrenia and reflects a construct that is overlapping, but not identical to, the genetic risk factor. Another explanation is that the DSM criteria for schizophrenia and spectrum conditions may be too broad. Tyrka et al. (1995) proposed this hypothesis and estimated that at least two-thirds of the misses (symptomatic cases not assigned to the taxon) can be accounted for by errors in the taxon classification scheme, but the remaining misses are due to... 

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