Question

Pierre wants to use the loan manager to track the long-term liability for his new pickup truck. what accounts must he set up prior to setting up the loan?

Answer 1

To track the long-term liability for his new pickup truck Pierre has to set up a long-term liability account register.  

A long-term liability account register lists transactions related to debts that are due in more than one year like a mortgage. . Long-term liabilities are also known as non-current liabilities You can use a long-term liability account register to track and manage transactions that affect your long-term liability account.

In a long-term liability account register Debt ratios (such as solvency ratios) compare liabilities to assets. The ratios may be modified to compare the total assets to long-term liabilities only.

This ratio is called long-term debt to assets. Long-term debt compared to total equity provides insight relating to a financing structure and financial leverage. Long-term debt compared to current liabilities also provides insight regarding the debt structure.

TO learn more about long-term liability account register here

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