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Day 22

Liabilities: Accounts Payable & Other Current Liabilities

Today we cover two more line items in the Liabilities section of the balance sheet. Watch the video and scroll down for your homework.

Your Homework

  1. Think of how you would explain the meaning of LIABILITIES in your own words to someone who has no knowledge of business or finance.* If you need some inspiration you can refer to answer below :)

  2. What are the two main types of Liabilities? What distinguishes these two categories from each other? Take a look at  TESLA 2022 10-K (or "annual report") and locate their Balance Sheet.

  3. What is the amount of Tesla's Accounts Payable for period ending Dec 31 2022? In your own words, what does this category and amount represent?

  4. What is Tesla's next largest current liability called? What is the distinction between this category and Accounts Payable?

Answers

  1. Other People's Money that we have to pay back at some point in the future. That's what the business owes other people.

  2. Current Liabilities and Non-Current Liabilities, Current means we expect to pay it off within one year and Non-Current means we expect to pay it off in more than a year.

  3. $15,255M; this amount represents the amount of unpaid bills that Tesla has. This is the money they owe to their vendors and suppliers for all the products and services Tesla has received to help them operate their automotive business.

  4. Accrued Liabilities and Other. This is also money owed to suppliers BUT the amount is being accrued because Tesla has yet to receive an actual invoice. The invoice being received is what distinguishes Accrued Liabilities from Accounts Payable. Once an invoice is received that amount transfers to Accounts Payable.

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