In the Balance Sheet, one key category is the Share Capital. At times, we might get confuse with the various classification of share capital. (more…)
Archive for the Balance Sheet Category
Let understand what’s reserves:-
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RESERVES |
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Reserves are appropriations of profit namely when profits have been ascertained after deducting all expenses which includes provision and others. Reserves are residual earnings after all expenses and taxation which belongs to the owners namely the shareholders. There are essentially two(2) types of Reserves:
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If you refer to below accounting equation, owner’s equity form one of the three key elements of a Balance Sheet.
Let understand &/define Owner’s Equity: (more…)
In this Part 3, let’s look at what are really long term liabilities in a typical Balance Sheet: (more…)
In this Part 2, let’s understand what are current liabilities: (more…)
This Part 1 explains what’s liabilities the component of the total liabilities side of a typical Balance Sheet: (more…)
03
11
2007
Assets(Non-Current) Side of The Balance Sheet(Part3of3)
Posted by: slang in Balance SheetThis last part of the article deals with non-current assets of a Balance Sheet. They consists of the Fixed Assets and Long Term Investments.
Let understand the following: (more…)
03
11
2007
Assets(Current Asset) Side Of The Balance Sheet(Part2of3)
Posted by: slang in Balance SheetThis part 2 of the assets side of the Balance Sheet specifically looks what’s current assets and its components:
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WHAT ARE CURRENT ASSETS? |
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Current assets are assets:
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Current Assets |
Description |
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Cash |
Funds that are readily available for distribution. |
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Marketable Securities |
Investments that are both readily marketable and expected to be converted into cash within one year |
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Inventories |
Consists of raw materials, work-in-progress and finished goods. Aggregate of items either held for sale in the ordinary course of the business, in process of production for such sale, or soon to be consumed in production |
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Accounts Receivable |
Amounts owed to the entity by its customers |
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Prepaid expenses |
Assets paid in advance whose usefulness will expire in the near future |
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Deposits |
Deposits are assets which are monies paid to landlord, government authorities and others. These monies are paid in advance but are recoverable in the near future. |
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Other Debtors |
Amount owing by the entity’s non customers like staff advances, etc |
When we study the accounting equation, we alway see that the equation always balance.Based on this fundamental rule of dual aspect or double entry system or procedure, the statement prepared will alway balance hence the word called “Balance ” Sheet.
This Part 1 of this article looks at the asset side of the Balance Sheet.
Let’s look at the following basics of the Balance Sheet and the meaning of assets:
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A BALANCE SHEET IS A: |
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SNAPSHOT of the financial position of an entity. This snapshot is at a point of time. Say, as at 7 May 2006, you look at Company A’s balance sheet, it reflects the financial position as at that day. After that day, the financial position company A can change to a better or worse situation. Also, remember that in the Balance Sheet, we have the three (3) key components: ASSETS= Liabilities + Owner’s Equity ( Refer to my illustration for the Dual Aspect Concept)
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DEFINE WHAT ARE THE CHARACTERISTIC OF ASSETS? |
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resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity
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WHAT ARE THE MAJOR COMPONENTS OF THE TOTAL ASSETS? |
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Comprises: |
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1. Current Assets |
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2. Property, plant and equipment |
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3. Investments |
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4. Intangible Assets |
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