Contingent gain:
A potential gain that depends on a future event arising out of a past transaction. Contingent gains are never recorded until actually realized.
Contingent liability:
An obligation to make a future payment if, and only if, an uncertain future event actually occurs. (Chapter 10) A potential liability that depends on a future event arising out of a past transaction; is not an existing liability.
Current liability:
Obligations due within a year of the balance sheet date or the company's next operating cycle, whichever is longer; paid using current assets or by creating other current liabilities.
Current portion of long-term debt:
The portion of long-term debt that is due within one year of the balance sheet date; reported under current liabilities on the balance sheet.
Demand loan:
A liability not having a fixed due date that is payable on the creditor's demand.
Discount on note payable:
The difference between the face value of a non-interest-bearing note payable and the amount borrowed; represents interest that will be paid on the note over its life.
Estimated liability:
An obligation of an uncertain amount that can be reasonably estimated.
Exempt supplies:
GST exempt services are educational, health care, and financial services.
Goods and Services Tax (GST):
A value-added tax on nearly all goods and services sold in Canada. The tax is levied by the federal government.
Harmonized Sales Tax (HST):
A combined GST and PST rate of 15% applied to taxable supplies. Currently, New Brunswick, Nova Scotia, and Newfoundland and Labrador apply HST.
Input Tax Credit (ITC):
GST paid by the registrant on purchases of taxable supplies. Input tax credits are applied against (reduce) GST Payable. Also known as GST Receivable.
Known liability:
A company's obligations that have little uncertainty and are set by agreements, contracts or laws; also called definitely determinable liabilities.
Liability:
A future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.
Long-term liability:
Obligations of a company that do not require payment within the longer of one year or an operating cycle.
Non-interest-bearing note:
A note that does not have a stated rate of interest; the interest is included in the face value of the note.
Payroll:
Employee compensation for work performed.
Payroll liabilities:
Employee compensation amounts owing to employees for work they have performed.
Provincial Sales Tax (PST):
A consumption tax levied by provincial governments on sales to the final consumers of products; calculated as a percentage of the sale price of the item being sold.
Registrant:
Registered individual or entity selling taxable supplies that is responsible for collecting the GST on behalf of the government. A business with sales of less than $30,000 per year does not have to register for GST purposes.
Short-term note payable:
A current obligation in the form of a written promissory note.
Short-term notes issued at a discount:
See non-interest-bearing note.
Taxable supplies:
Taxable goods or services on which GST is calculated and includes everything except zero-rated and exempt supplies.
Trade accounts payable:
Amounts owed to suppliers regarding products or services purchased on credit. Commonly referred to as accounts payable.
Warranty:
An agreement that obligates the seller or manufacturer to repair or replace a product when it breaks or otherwise fails to perform properly within a specified period.
Zero-rated supplies:
Goods including groceries, prescription drugs, and medical devices that are exempt from GST.
