WHAT IS A BALANCE SHEET? A Balance Sheet is a 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 … Read more
WHAT ARE LONG TERM LIABILITES? Long Term Liabilities: Is opposite of current liabilities which are more than 12 months from the date of the balance sheet. Examples are: Long term debts /fixed term loan Remember that we need to classify the total debts into two(2) parts: Current portion of long-term debts( amount owing … Read more
WHAT ARE CURRENT LIABILITIES? Current liabilities are obligations/liabilities: that is expected to be settled in the normal course of the enterprise’s operating cycle ; or Is due to be settled within twelve months of the balance sheet date Current Liabilities Description Accounts payable Claims of suppliers arising from their providing goods or services to the … Read more
WHAT IS A BALANCE SHEET? A Balance Sheet is a snapshot of the financial position of an entity. This snapshot is at a point of time. Say, as at 7 May 2007, you look at Company A’s balance sheet, it reflects the financial position as at that day. After that day, the financial position company … Read more
WHAT ARE FIXED ASSETS?   Fixed Assets are unlike current assets:  Which are NOT expected to be realised  or held for trading or sale  The costs of the fixed assets are allocated over the period of the useful lives to generate the income associate with it. This follows closely to the matching … Read more
WHAT ARE CURRENT ASSETS? Current assets are assets: that are expected to be realised in, or is held for sale or consumption in, the normal course of the enterprise’s operating cycle ; or is held primarily for trading purposes or for the short term and expected to be realised with twelve months of the balance … Read more
WHAT IS A BALANCE SHEET? A Balance Sheet is a 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 … Read more
PROFIT Profit is when the Income exceeds Expenses (Loss is when Income is lesser than Expenses). Therefore, profit is the residual amount that remains after expenses have been deducted from income. The profit shown in the Income Statement are based on the Accrual and Matching Concepts and not on cash basis. ( Refer to my … Read more
ACCRUALS CONCEPT The effects of transactions and other events are recognised when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate. ILLUSTRATION NO.1 Company A has received cash of $40,000 … Read more
MATCHING CONCEPT A process in which expenses are recognised in the income statement on the basis of a direct association between the costs incurred and the earning of specific items of income. This process involves the simultaneous or combined recognition of revenues and expenses that result directly and jointly from the same transactions or other … Read more