Balance Sheet (Accounting Reviewer)

• A report of the resources owned but the company and claim to its resources

  Balance Sheet
• A snapshot of the firm's financial position

  Balance Sheet
• Basic Sections of Balance Sheet

  Assets

  Liabilities

  Capital or Equity
• Economic esources owned and used by the business in conducting its operation and are expected to provide future benefits

  Assets
• Economic Obligations of and enterprise on those resources

  Liabilities
• Represents the investment of the business owners

  Capital
• Asset = Liabilities + Capital
• Asset or resources which are expected to be realized in cash or consumed during the normal operating cycle

  Current Asset
• Must be readily available for the payment of current obligations and must be free from any contractual restriction that limits its use in satisfying debts

  Cash & Cash Equivalents
• Consists of coins, currency and available funds for deposit

  Cash
• Debt and Equity securities purchased with the intent of selling them in the future

  Trading Securities
• Involves frequent buying and selling of securities generally for the purpose of generating profits on short term differences in price

  Trading Securities
• Presented at net realizable value on balance sheet date if the amount expected is to be received in cash (<12 months)

  Receivables
• Cash received from customers

  Account Receivable
• Records the value of promissory notes that a business is owed and should receive a payment for

  Notes Receivable
• Contra account that nets against total receivables to reflect only the amount expected to be paid

  Allowance for Doubtful Accounts
• Items of tangible property which are held for sale, in the process of production and currently consumed in production

  Inventories
• Currently consumed in the production of goods or services to be available for sale

  Raw Materials
• In the process for production of such sale

  Work in Progress
• Held for sale in the ordinary course of business

  Finished Goods
• Cash Flow Assumptions in Valuing Ending Inventory

  Specific Identification

  Weighted Average

  First-in, First-Out
• Expenses used in operations that are paid in advance

  Prepaid Expenses
• Real estate, property, trademark and other long-term investment that takes longer than a year to convert into cash

  Non-current Asset
• Asset that are not directly identified with the operating activity and assets not involved in the sale or production of goods and services

  Long-Term Investment
• All tangible assets with an estimated useful life beyond one year and used to conduct business

  Property, Plant and Equipment
• Not intended for sale in the ordinary course of business

  Property, Plant and Equipment
• Property such as land are undepreciable since it has no estimate for useful life.
• Property such as building, machinery, equipment and furniture improvements to leased facilities are subject to depreciation and amortization.
• Property such as timber, oil, mining lands and leases are subject to depletion.
• Systematic mean of allocating the cost of long-lived asset over its useful life

  Depreciation
• Requires an asset's estimate useful life and salvage value

  Depreciation
• Estimated value of an asset at the end of its useful life

  Salvage Value
• Represents the total amount of cost that has already been charged to income

  Accumulated Depreciation
• Depreciation Methods

  Straight-line

  Units of output

  Sum-of-the-year's-digits

  Declining Balance
• Assumes an asset loses its value at a constant rate

  Straight-line Method
• Assigns an equal amount of depreciation to each unit of product manufactured or service rendered by asset

  Units of output
• Uses expected life and adds the digit for every year to give the final depreciation expense amount

  Sum-of-the-year's-digits
• Accelerated Depreciation system of recording larger depreciation expense during the earlier years of an asset's useful life and recording smaller depreciation expense in the asset's later years

  Declining Balance
• Asset is carried out at a revalued amount being its fair value at the date of revaluation, provided that the fair value is measured reliably

  PPE Revaluation Model
• Long-lived assets without physical characteristics, whose value lies in rights, privileges and competitive advantages

  Intangible Assets