What are the five most frequently used current liabilities?

accounts payable

accrued expenses payable

unearned revenue

short term notes payable

warranty payable

Current liabilities are usually incurred mostly for financing activities. True or false?

True

Part II: Account for accounts payable and analyze accounts payable turnover

What does the accounts payable turnover ratio measure?

the speed in which a company pays its suppliers

What is the equation used to express accounts payable turnover (T/O) in days?

= (365)/(net credit purchases/average accounts payable)

Expressing the turnover ratio in terms of the average number of days it took the business to pay its suppliers invoices is called ___days sales of inventory______.

Companies with shorter DPOs are generally better credit risks than those with longer payment periods. True or false?

True