Items

Current Assets

Cash equivalents

Elaboration of each item in Balance Sheet

Descriptions
Assets that are expected to be converted to cash within a year.
For examples
Account receivable and inventory
Highly liquid investment having a maturity of three months or less.
It should be at minimal risk of a change in value.
Examples: Short-term government bonds and Treasury bills

Marketable securities

Financial instruments which can be readily sold on a stock exchange

or bond exchange.
Examples Common and Prefers Stock

Account Receivables
Or
Trade receivables.
Inventory

Accounts receivable is the money that a company has a right to

receive because it had provided customers with goods or services.

Raw materials
Working in process
Finished goods
Prepaid expanses

Stock in trades
Trades debts

Interest accrued
Or
Markup accrued
Doubtful debts

Inventory is the collection of unsold products waiting to be sold.

Why it matters:
Inventory is a key component of calculating cost of goods sold and
is a key driver of profit. Many financial ratios like inventory
turnover are used to measure certain aspects of the health of a
business.
Prepaid expenses are future expenses that have been paid in advance
and not expired yet.
Treatment
The insurance company requires payment in advance, the amount
paid is often recorded as Prepaid Insurance. If the company issues
monthly financial statements, its income statement will
report Insurance Expense that is one-sixth of the amount paid.
All the goods equipment kept on hand and used in carrying on a
business.
A trade debt in the business is an account payable. It is the money
one company owes another for a good or service received but not yet
paid for. These obligations are usually paid between 10 and 90 days.
Interest that has been earned but not collected.
Treatment
It will continue to record it as an asset on the balance sheet for the
period in which it accrued.
A doubtful debt is an account receivable that might become a bad
debt at some point in the future.
In this case, create a reserve account (also known as a contra
account) for accounts receivable that may eventually become bad

Petty cash

Deferred tax Assets

Non Current Assets
Long term Assets

Intangible Assets

Investment property

Long term investment

Accumulated
depreciated

Current liabilities

Short term

debts, estimate the amount of accounts receivable that may become

bad debts in any given period, and create a credit to enter the amount
of your estimate in this reserve account, which is known as the
allowance for doubtful accounts. The debit in the transaction is to
the bad debt expense. When you eventually identify an actual bad
debt, write it off by debiting the allowance for doubtful accounts and
crediting the accounts receivable account.
Petty cash is a small amount of cash on hand that is used for paying
small amounts owed, rather than writing a check.
Why it matters:
Petty cash allows businesses dealing in cash to operate more
efficiently by allowing them to provide their cash-paying client with
change. Additionally, a petty cash supply allows businesses to easily
cover small, but often immediate, needs.
Refers to a situation where a business has overpaid taxes or taxes
paid in advance on its balance sheet.
A noncurrent asset is an asset that is not likely to turn to unrestricted
cash within one year of the balance sheet date.
Example
Property, plant and equipment
An intangible asset is an asset that is not physical in nature.
Examples
Trademarks, copyrights and Goodwill
Investment property is real estate property that has been purchased
with the intention of earning a return on the investment, either
through rental income, the future resale of the property or both. An
investment property can be a long-term endeavor or an intended
short-term investment such as in the case of flipping, where real
estate is bought, remodeled or renovated, and sold at a profit.
A long-term investment represents the company's investments,
including stocks, bonds, real estate and cash, that it intends to hold
for more than ten year.
Accumulated Depreciation is also the title of the contra asset
account which is credited when Depreciation Expense is recorded
each accounting period. It is created against the deprecated account
reported in balance sheet.
Current liabilities are a company's debts or obligations that are due
within one year, appearing on the company's balance sheet.
Examples
Short term debt, accounts payable and other debts.
The debt is the liabilities account that is usually made up of short-

borrowing(debt)

term bank loans taken out by a company. This account is made up of

any debt incurred by a company that is due within one year.
Why its matter
STB account is larger than the company's cash and cash equivalents,
this suggests that the company may be in poor financial health and
does not have enough cash to pay off its short-term debts.

Provision for income

tax

A provision for income taxes is the estimated amount that a business

or individual taxpayer expects to pay in income taxes for the current
year
Accounts payable are debits that must be paid off within a given
period to avoid default.
The amount of principal due on a formal written promise to pay.
Loans from banks are included in this account.
Examples
Loan issued to a company by a bank
Interest payable is the interest expense that has been incurred but has
not been paid as of the date of the balance sheet.
Amounts owed to employees for hours worked but not yet paid as of
the date of the balance sheet.
Taxes that must be paid to the government within one year.
Calculation
Prevailing tax law in the company's home country
If receive a tax benefit from its revenue agency and the tax payable
will decrease.
Refers to advance payments for products or services that are to be
delivered in the future. Unearned revenue as a liability on a balance
sheet.
Treatment
As the product or service is delivered over time, it is recognized
as revenue on the income statement.
Amount of salaries earned by a company's employees, but which
have not yet been paid by the company.

Account payables
Note payables

Interest payables
Wages payables
Tax payables

Deferred revenue
Or
Unearned revenue

Salaries payables

Non-current liabilities

Long term financing

Deferred tax liabilities

Non-Current liabilities are a company's debts or obligations that are

paid with in accounting period, appearing on the company's balance
sheet.
Long term financing is a form of financing that is provided for a
period of more than a year.
Long-term financing include a 30 year mortgage or a 10-year
Treasury note.
A deferred tax liability occurs when taxable income is smaller than

Owners' Equity
OR
Stockholders' Equity

Owner equity

Shareholders' Equity

Share capital

Common Stock
Vs
Preferred stock

Retain earning

Treasury Shares

the income reported on the income statements. This is only a

temporary difference. The most common reason behind deferred tax
liability is the use of different depreciation methods for financial.
Owner's Equity is the words used on the balance sheet when the
company is a sole proprietorship. If the company is a corporation,
the words Stockholders' Equity is used instead of Owner's Equity.
Both owner's equity and stockholders' equity accounts will normally
have credit balances.
Owners Equity represents both the equity capital invested by
shareholders in the venture and the profits generated from the
operations of the company.
Shareholders' equity is the amount of public financing a company
has obtained through the sale of shares of both common
and preferred stock.
Shareholders Equity = Share Capital + Retained Earnings
Treasury Shares
Share capital consists of all funds raised by a company in exchange
for shares of either common or preferred shares of stock. The
amount of share capital can change over time.
How to increased Share Capital
A company that wishes to raise more equity can obtain authorization
to issue and sell additional shares, thereby increasing its share
capital.
Common stock and preferred stock both represent some degree of
ownership of a company. Holding shares of common stock gives you
the opportunity to vote in the election of the board of directors. This
is usually equivalent to one vote per share that you own. Owning
preferred stock usually guarantees the payment of dividends but
does not come with voting rights.
The net income that remains after paying dividends. It is reported on
the balance sheet as the cumulative sum of each year's retained
earnings over the life of the business. Retained earnings can be used
to pay debt and future dividends, or can be reinvested into business
activities.
How it helps in Business
Research and development purposes, investment in the physical
plant, purchase of additional or better equipment
Treasury stock that has been bought back by the issuing corporation
and is available for retirement or resale; it is issued but not
outstanding; it cannot vote and pays no dividends