ACCOUNTING EQUATION.pptx
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The accounting equation is the basic principle of accounting that shows the relationship between a company's assets, liabilities, and shareholders' equity. It states that a company's total assets are always equal to the sum of its liabilities and shareholders' equity. The accounting equation establishes that for every debit, there is a corresponding credit, and it is the foundation of the double-entry bookkeeping system. Assets are things of value owned by the company, while liabilities are amounts owed, and shareholders' equity represents the owners' investment and retained earnings.
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Financial accounting involves recording business transactions over a period of time and preparing financial statements such as the balance sheet, income statement, and cash flow statement. These statements provide information on the company's operating performance. Transactions are recorded through debits and credits that increase or decrease different accounts. The balance sheet provides a snapshot of a company's assets, liabilities, and owner's equity at a given time. The income statement reports revenue and expenses to measure financial performance over a period. Cash flow tracks cash inflows and outflows.
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A balance sheet is a financial statement that lists a business's assets (what it owns), liabilities (what it owes), and equity (the owner's investment). It provides a snapshot of these accounts on a specific date. Assets are categorized as fixed assets, which will be kept for several years, and current assets, which will not stay long-term. Liabilities include current liabilities that must be paid within a year and long-term liabilities due in over one year. The balance sheet balances by having total assets equal total liabilities plus equity.
Balance Sheet
The balance sheet is a financial statement that lists a business's assets (what it owns) and liabilities (what it owes) on a particular day. Assets include fixed assets like buildings and machinery, and current assets like materials and cash that will not stay in the business long-term. Liabilities include current liabilities like debts that must be paid within a year, and long-term liabilities like loans and mortgages. The balance sheet also shows where the money used to buy assets came from, such as share capital from shareholders or retained profit from previous years. The net assets should equal the total amount invested in the business.
Due WednesdayDiscussion Requirements Your weekly discussion p.docx
Due Wednesday
Discussion Requirements:
Your weekly discussion posts should be at least a paragraph (150 to 300 words) for each topic listed. In addition, you are required to post at least two responses to other students’ comments in each discussion-question thread by Sunday Night.
Part 1: By Wednesday night: Answer the following questions:
The financial news is always about income and income projections. If everyone including taxing authorities are so interested in net income, why is this section titled The Balance Sheet Reveals the Most?
Choose two concepts/topics you learned from this section that you found most interesting or confusing? Please briefly explain the concepts and why you found them to be the most interesting.
Lecture Notes
The balance sheet is a snapshot of a company’s financial position. It shows the items of economic value (assets) a company owns, what is owed to creditors (liabilities), and what is owed to owners (equity). It is the balance sheet because it represents a company’s accounting equation: assets = liabilities + equity. Equations must always balance.
This statement also has a heading. It starts with the company name. The statement name comes next. The last line is the time-period covered. A balance sheet only represents a date. Therefore, it is called a snapshot.
Estimates and assumptions are present in the balance sheet. Cash is the only account that will not contain estimates and assumptions. Allowance for bad debt or allowance for doubtful accounts is an estimate of how much of the accounts receivable will not be collected. Accumulated depreciation is an account used to help spread the cost of a long-term, tangible asset over its useful economic life. It is an estimate that assumes the life term of an asset.
Intangible assets such as franchises, copyrights and trademarks are amortized. Amortization is the process of spreading the cost of an intangible asset over its useful or legal life. It is also an estimate based on an assumption.
Most of the time, assets and liabilities on the balance sheet are split between short-term and long-term. Short-term are assets that can be converted to cash within a year. Short-term liabilities are those that can be paid within a year. Long-term are those items that will take longer than a year to collect or pay. Long-term assets are frequently presented in more categories: Investments, Property, Plant, and Equipment (PPE), Natural Resources, Intangible assets.
As mentioned in the introduction, nonprofit balance sheets are called statements of financial position. The name alone will not identify the statement as a nonprofit statement because for profit statements are often referred to as statements of financial position. They both cover assets, liabilities, and equity. There will also be a difference in focus. A regular for profit entity focuses on revenue generation. A nonprofit balance sheet will focus on the sources of funds.
The Balance Sheet Reveals the M.
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Financial accounting involves recording business transactions over a period of time and preparing financial statements such as the balance sheet, income statement, and cash flow statement. These statements provide information on the company's operating performance. Transactions are recorded through debits and credits that increase or decrease different accounts. The balance sheet provides a snapshot of a company's assets, liabilities, and owner's equity at a given time. The income statement reports revenue and expenses to measure profitability over a period. Cash flow tracks cash inflows and outflows.
Lecture 1 FA.pdf
Financial accounting involves recording business transactions over a period of time and preparing financial statements such as the balance sheet, income statement, and cash flow statement. These statements provide information on the company's operating performance. Transactions are recorded through debits and credits that increase or decrease different accounts. The balance sheet provides a snapshot of a company's assets, liabilities, and owner's equity at a given time. The income statement reports revenue and expenses to measure financial performance over a period. Cash flow tracks cash inflows and outflows.
Balance sheet
A balance sheet is a financial statement that lists a business's assets (what it owns), liabilities (what it owes), and equity (the owner's investment). It provides a snapshot of these accounts on a specific date. Assets are categorized as fixed assets, which will be kept for several years, and current assets, which will not stay long-term. Liabilities include current liabilities that must be paid within a year and long-term liabilities due in over one year. The balance sheet balances by having total assets equal total liabilities plus equity.
Balance Sheet
The balance sheet is a financial statement that lists a business's assets (what it owns) and liabilities (what it owes) on a particular day. Assets include fixed assets like buildings and machinery, and current assets like materials and cash that will not stay in the business long-term. Liabilities include current liabilities like debts that must be paid within a year, and long-term liabilities like loans and mortgages. The balance sheet also shows where the money used to buy assets came from, such as share capital from shareholders or retained profit from previous years. The net assets should equal the total amount invested in the business.
Due WednesdayDiscussion Requirements Your weekly discussion p.docx
Due Wednesday
Discussion Requirements:
Your weekly discussion posts should be at least a paragraph (150 to 300 words) for each topic listed. In addition, you are required to post at least two responses to other students’ comments in each discussion-question thread by Sunday Night.
Part 1: By Wednesday night: Answer the following questions:
The financial news is always about income and income projections. If everyone including taxing authorities are so interested in net income, why is this section titled The Balance Sheet Reveals the Most?
Choose two concepts/topics you learned from this section that you found most interesting or confusing? Please briefly explain the concepts and why you found them to be the most interesting.
Lecture Notes
The balance sheet is a snapshot of a company’s financial position. It shows the items of economic value (assets) a company owns, what is owed to creditors (liabilities), and what is owed to owners (equity). It is the balance sheet because it represents a company’s accounting equation: assets = liabilities + equity. Equations must always balance.
This statement also has a heading. It starts with the company name. The statement name comes next. The last line is the time-period covered. A balance sheet only represents a date. Therefore, it is called a snapshot.
Estimates and assumptions are present in the balance sheet. Cash is the only account that will not contain estimates and assumptions. Allowance for bad debt or allowance for doubtful accounts is an estimate of how much of the accounts receivable will not be collected. Accumulated depreciation is an account used to help spread the cost of a long-term, tangible asset over its useful economic life. It is an estimate that assumes the life term of an asset.
Intangible assets such as franchises, copyrights and trademarks are amortized. Amortization is the process of spreading the cost of an intangible asset over its useful or legal life. It is also an estimate based on an assumption.
Most of the time, assets and liabilities on the balance sheet are split between short-term and long-term. Short-term are assets that can be converted to cash within a year. Short-term liabilities are those that can be paid within a year. Long-term are those items that will take longer than a year to collect or pay. Long-term assets are frequently presented in more categories: Investments, Property, Plant, and Equipment (PPE), Natural Resources, Intangible assets.
As mentioned in the introduction, nonprofit balance sheets are called statements of financial position. The name alone will not identify the statement as a nonprofit statement because for profit statements are often referred to as statements of financial position. They both cover assets, liabilities, and equity. There will also be a difference in focus. A regular for profit entity focuses on revenue generation. A nonprofit balance sheet will focus on the sources of funds.
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Pl account & balance sheet
This document provides details on preparing profit and loss accounts and balance sheets. It begins by defining key accounting concepts like revenue, expenses, net profit, and the difference between cash basis and accrual basis accounting. It then explains the purpose and preparation of key financial statements like the trading account, profit and loss account, and balance sheet. The trading account is used to calculate gross profit/loss, while the profit and loss account calculates net profit/loss. The balance sheet presents the financial position of a business on a given date by listing assets, liabilities, and capital. Accruals and deferrals are also discussed.
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The Balance Sheet
A balance sheet is the financial statement that reports a firm’s financial condition at a specific time. As highlighted in the sample balance sheet in Figure 17.5 (for our hypothetical vegetarian restaurant Very Vegetarian introduced in Chapter 13), assets are listed in a separate column from liabilities and owners’ (or stockholders’) equity. The assets are equal to, or balanced with, the liabilities and owners’ (or stockholders’) equity. The balance sheet is that simple.
figure 17.5: SAMPLE VERY VEGETARIAN BALANCE SHEET
Current assets: Items that can be converted to cash within one year.
Fixed assets: Items such as land, buildings, and equipment that are relatively permanent.
Intangible assets: Items of value such as patents and copyrights that don’t have a physical form.
Current liabilities: Payments that are due in one year or less.
Long-term liabilities: Payments not due for one year or longer.
Owner’s equity: The value of what stockholders own in a firm (also called stockholder’s equity).
balance sheet
Financial statement that reports a firm’s financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners’ equity.
Let’s say you want to know what your financial condition is at a given time. Maybe you want to buy a house or car and therefore need to calculate your available resources. One of the best measuring sticks is your balance sheet. First, add up everything you own—cash, property, and money owed you. These are your assets. Subtract from that the money you owe others—credit card debt, IOUs, car loan, and student loan. These are your liabilities. The resulting figure is your net worth, or equity. This is fundamentally what companies do in preparing a balance sheet: they follow the procedures set in the fundamental accounting equation. In that preparation, it’s important to follow generally accepted accounting principles (GAAP).
Since it’s critical that you understand the financial information on the balance sheet, let’s take a closer look at what is in a business’s asset account and what is in its liabilities and owners’ equity accounts.
Classifying Assets
Assets are economic resources (things of value) owned by a firm. Assets include productive, tangible items such as equipment, buildings, land, furniture, and motor vehicles that help generate income, as well as intangible items with value like patents, trademarks, copyrights, and goodwill. Goodwill represents the value attached to factors such as a firm’s reputation, location, and superior products. Goodwill is included on a balance sheet when one firm acquires another and pays more for it than the value of its tangible assets. Intangible assets like brand names can be among the firm’s most valuable resources. Think of the value of brand names such as Starbucks, Coca-Cola, McDonald’s, and Apple. Not all companies, however, list intangible assets on their balance sheets.
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Basics of Accounting
Accounting is a system used to record, analyze, and communicate financial information. It involves recording transactions, classifying them, and communicating the results. The main objectives of accounting are to keep systematic records, ascertain profitability, determine financial position, assist in decision making, and fulfill legal compliance. Some key functions of accounting include keeping records, communicating results, meeting legal requirements, and planning and controlling business activities.
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Statement-of-Financial-Position (2).docx
The document defines and provides examples of the key elements of a Statement of Financial Position (SFP):
1) Assets are economic resources owned by a business such as cash, inventory, property and equipment classified as current or non-current.
2) Liabilities are financial obligations of the business such as accounts payable, accrued expenses, unearned income classified as current or non-current.
3) Owner's equity represents the owner's claim on the assets and is calculated as total assets minus total liabilities. The SFP presents the assets, liabilities, and owner's equity of a business as of a specific date.
· Read the article and summarize.· Discuss your reaction to th.docx
· Read the article and summarize.
· Discuss your reaction to the article
· Generate 2-3 recommendations for an organization needing to create a more "thriving" environment.
· Your recommendations should be written as if you were an OB Consultant and were trying to convince top leadership the value of a "thriving" environment.
Be sure to utilize your breadth of knowledge about OB. You will be graded on your ability to use the concepts from our course to strengthen your argument. For example: performance management, motivation, leadership, and/or job design would likely relate to the article but I am sure other concepts would also fit.
**Please write 2 pages. Please provide high quality.
Aswath Damodaran! 1!
Financial Statement Analysis!
“The raw data for investing”
Aswath Damodaran! 2!
Questions we would like answered…!
Assets Liabilities
Assets in Place Debt
Equity
What is the value of the debt?
How risky is the debt?
What is the value of the equity?
How risky is the equity?
Growth Assets
What are the assets in place?
How valuable are these assets?
How risky are these assets?
What are the growth assets?
How valuable are these assets?
Aswath Damodaran! 3!
Basic Financial Statements!
The balance sheet, which summarizes what a firm owns and owes at a
point in time.
The income statement, which reports on how much a firm earned in
the period of analysis
The statement of cash flows, which reports on cash inflows and
outflows to the firm during the period of analysis
Aswath Damodaran! 4!
The Accounting Balance Sheet!
Assets Liabilities
Fixed Assets
Debt
Equity
Short-term liabilities of the firm
Intangible Assets
Long Lived Real Assets
Assets which are not physical,
like patents & trademarks
Current Assets
Financial InvestmentsInvestments in securities &
assets of other firms
Short-lived Assets
Equity investment in firm
Debt obligations of firm
Current
Liabilties
Other
Liabilities Other long-term obligations
Figure 4.1: The Balance Sheet
Aswath Damodaran! 5!
Principles underlying accounting balance
sheets!
An Abiding Belief in Book Value as the Best Estimate of Value: Unless
a substantial reason is given to do otherwise, accountants view the
historical cost as the best estimate of the value of an asset.
A Distrust of Market or Estimated Value: The market price of an asset
is often viewed as both much too volatile and too easily manipulated
to be used as an estimate of value for an asset. This suspicion runs
even deeper when values are is estimated for an asset based upon
expected future cash flows.
A Preference for under estimating value rather than over estimating it:
When there is more than one approach to valuing an asset, accounting
convention takes the view that the more conservative (lower) estimate
of value should be used rather than the less conservative (higher)
estimate of value.
Aswath Damodaran! 6!
Measuring asset value!
.
Financial Statements.pdf
Financial statements are written records that convey the business activities and the financial performance of a company.
Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
Credit Training[Finall]
The document provides an agenda for a two-day credit training seminar covering various topics related to understanding financial statements and their use in lending decisions. Day one includes sessions on cash flow, understanding financials, and group exercises. Day two focuses on more group exercises and examples of analyzing example client financial statements.
Business Finance_Week1_Lesson1 Fundamentals
A Statement of Financial Position reports a company's assets, liabilities, and shareholders' equity at a point in time. It provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders. Assets and liabilities can be classified as current or non-current. Current assets can be converted to cash within a year, while non-current assets cannot. Current liabilities are due within a year, while non-current liabilities are not. Examples of each are provided. Capital or equity represents the residual interest in a company's assets after deducting all liabilities, and is known as owners', partners', or shareholders' equity depending on the business type.
Balance sheet
A balance sheet summarizes a company's assets, liabilities, and shareholders' equity at a point in time. Assets are listed in order of liquidity and include current assets that can be converted to cash within a year and non-current assets that cannot. Liabilities include money owed to outside parties within one year for current liabilities and after one year for long-term liabilities. Shareholders' equity represents the money attributable to owners in the form of net assets. A balance sheet provides a snapshot of finances and should be compared over time and against industry peers. Personal and small business balance sheets similarly list assets, liabilities, and equity but are simpler forms.
Balance Sheet
The accounting balance sheet is one of the major financial statements used by accountants and business owners.
Accounting: Financial statement
The document defines and provides examples of key financial statements including the balance sheet, income statement, cash flow statement, and statement of changes in equity. The balance sheet presents a company's assets, liabilities, and equity at a point in time. It categorizes assets as current, non-current, growth, and defensive and liabilities as current and long-term. The income statement reports a company's revenues and expenses over a period of time. The cash flow statement shows cash inflows and outflows from operating, investing, and financing activities. The statement of changes in equity details movements in owners' equity from net income, share transactions, dividends, and other adjustments.
ENM5201_week 7.pdf
The document discusses financial statements and balance sheets. It explains that public companies must produce four financial statements: the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity. The balance sheet lists a company's assets, liabilities, and stockholders' equity at a point in time. It is divided into current and long-term assets and current and long-term liabilities. The difference between assets and liabilities is the stockholders' equity. While the balance sheet provides information, it does not always accurately reflect the true value of a company's equity.
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Assets are economic resources (things of value) owned by a firm. Assets include productive, tangible items such as equipment, buildings, land, furniture, and motor vehicles that help generate income, as well as intangible items with value like patents, trademarks, copyrights, and goodwill. Goodwill represents the value attached to factors such as a firm’s reputation, location, and superior products. Goodwill is included on a balance sheet when one firm acquires another and pays more for it than the value of its tangible assets. Intangible assets like brand names can be among the firm’s most valuable resources. Think of the value of brand names such as Starbucks, Coca-Cola, McDonald’s, and Apple. Not all companies, however, list intangible assets on their balance sheets.
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Accounting is a system used to record, analyze, and communicate financial information. It involves recording transactions, classifying them, and communicating the results. The main objectives of accounting are to keep systematic records, ascertain profitability, determine financial position, assist in decision making, and fulfill legal compliance. Some key functions of accounting include keeping records, communicating results, meeting legal requirements, and planning and controlling business activities.
Mkting Mgmt 2.03
The document discusses cash flow statements, balance sheets, and income statements. It provides definitions and examples of key terms used in each type of financial statement. Cash flow statements track money in and out of the business. Balance sheets show a company's assets, liabilities, and equity at a point in time. Income statements summarize a company's revenues and expenses over a period of time. Financial statements together provide important information to managers and investors about a company's financial performance and health.
Statement-of-Financial-Position (2).docx
The document defines and provides examples of the key elements of a Statement of Financial Position (SFP):
1) Assets are economic resources owned by a business such as cash, inventory, property and equipment classified as current or non-current.
2) Liabilities are financial obligations of the business such as accounts payable, accrued expenses, unearned income classified as current or non-current.
3) Owner's equity represents the owner's claim on the assets and is calculated as total assets minus total liabilities. The SFP presents the assets, liabilities, and owner's equity of a business as of a specific date.
· Read the article and summarize.· Discuss your reaction to th.docx
· Read the article and summarize.
· Discuss your reaction to the article
· Generate 2-3 recommendations for an organization needing to create a more "thriving" environment.
· Your recommendations should be written as if you were an OB Consultant and were trying to convince top leadership the value of a "thriving" environment.
Be sure to utilize your breadth of knowledge about OB. You will be graded on your ability to use the concepts from our course to strengthen your argument. For example: performance management, motivation, leadership, and/or job design would likely relate to the article but I am sure other concepts would also fit.
**Please write 2 pages. Please provide high quality.
Aswath Damodaran! 1!
Financial Statement Analysis!
“The raw data for investing”
Aswath Damodaran! 2!
Questions we would like answered…!
Assets Liabilities
Assets in Place Debt
Equity
What is the value of the debt?
How risky is the debt?
What is the value of the equity?
How risky is the equity?
Growth Assets
What are the assets in place?
How valuable are these assets?
How risky are these assets?
What are the growth assets?
How valuable are these assets?
Aswath Damodaran! 3!
Basic Financial Statements!
The balance sheet, which summarizes what a firm owns and owes at a
point in time.
The income statement, which reports on how much a firm earned in
the period of analysis
The statement of cash flows, which reports on cash inflows and
outflows to the firm during the period of analysis
Aswath Damodaran! 4!
The Accounting Balance Sheet!
Assets Liabilities
Fixed Assets
Debt
Equity
Short-term liabilities of the firm
Intangible Assets
Long Lived Real Assets
Assets which are not physical,
like patents & trademarks
Current Assets
Financial InvestmentsInvestments in securities &
assets of other firms
Short-lived Assets
Equity investment in firm
Debt obligations of firm
Current
Liabilties
Other
Liabilities Other long-term obligations
Figure 4.1: The Balance Sheet
Aswath Damodaran! 5!
Principles underlying accounting balance
sheets!
An Abiding Belief in Book Value as the Best Estimate of Value: Unless
a substantial reason is given to do otherwise, accountants view the
historical cost as the best estimate of the value of an asset.
A Distrust of Market or Estimated Value: The market price of an asset
is often viewed as both much too volatile and too easily manipulated
to be used as an estimate of value for an asset. This suspicion runs
even deeper when values are is estimated for an asset based upon
expected future cash flows.
A Preference for under estimating value rather than over estimating it:
When there is more than one approach to valuing an asset, accounting
convention takes the view that the more conservative (lower) estimate
of value should be used rather than the less conservative (higher)
estimate of value.
Aswath Damodaran! 6!
Measuring asset value!
.
Financial Statements.pdf
Financial statements are written records that convey the business activities and the financial performance of a company.
Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
Credit Training[Finall]
The document provides an agenda for a two-day credit training seminar covering various topics related to understanding financial statements and their use in lending decisions. Day one includes sessions on cash flow, understanding financials, and group exercises. Day two focuses on more group exercises and examples of analyzing example client financial statements.
Business Finance_Week1_Lesson1 Fundamentals
A Statement of Financial Position reports a company's assets, liabilities, and shareholders' equity at a point in time. It provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders. Assets and liabilities can be classified as current or non-current. Current assets can be converted to cash within a year, while non-current assets cannot. Current liabilities are due within a year, while non-current liabilities are not. Examples of each are provided. Capital or equity represents the residual interest in a company's assets after deducting all liabilities, and is known as owners', partners', or shareholders' equity depending on the business type.
Balance sheet
A balance sheet summarizes a company's assets, liabilities, and shareholders' equity at a point in time. Assets are listed in order of liquidity and include current assets that can be converted to cash within a year and non-current assets that cannot. Liabilities include money owed to outside parties within one year for current liabilities and after one year for long-term liabilities. Shareholders' equity represents the money attributable to owners in the form of net assets. A balance sheet provides a snapshot of finances and should be compared over time and against industry peers. Personal and small business balance sheets similarly list assets, liabilities, and equity but are simpler forms.
Balance Sheet
The accounting balance sheet is one of the major financial statements used by accountants and business owners.
Accounting: Financial statement
The document defines and provides examples of key financial statements including the balance sheet, income statement, cash flow statement, and statement of changes in equity. The balance sheet presents a company's assets, liabilities, and equity at a point in time. It categorizes assets as current, non-current, growth, and defensive and liabilities as current and long-term. The income statement reports a company's revenues and expenses over a period of time. The cash flow statement shows cash inflows and outflows from operating, investing, and financing activities. The statement of changes in equity details movements in owners' equity from net income, share transactions, dividends, and other adjustments.
ENM5201_week 7.pdf
The document discusses financial statements and balance sheets. It explains that public companies must produce four financial statements: the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity. The balance sheet lists a company's assets, liabilities, and stockholders' equity at a point in time. It is divided into current and long-term assets and current and long-term liabilities. The difference between assets and liabilities is the stockholders' equity. While the balance sheet provides information, it does not always accurately reflect the true value of a company's equity.
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ACCOUNTING EQUATION.pptx
- 2. What is the Accounting Equation? It is the basic principle of accounting. It shows the straight forward relationship between assets, liabilities & equity. It states that company’s total assets are equal to the sum of its liabilities and shareholders equity. Also known as balance sheet equation. It is the foundation for double entry book keeping system.
- 3. Accounting Equation Formula ASSETS LIABILITIES CAPITAL
- 4. Derived Equations CAPITAL ASSETS LIABILITIES LIABILITIES ASSETS CAPITAL
- 5. Understanding the Accounting Equation ◦ Represents how Assets, Liabilities & Capital are associated which each other. ◦ States that ‘ for every debit, there is a corresponding Credit’. ◦Total amount of assets will always be equal the sum of liabilities & shareholders' equity.
- 6. Elements in Accounting Equation Assets: Material things, possessions or properties of business. It includes Physical or real properties called tangible assets, right in certain assets called intangible assets & amount due to the business from others. Assets may be classified into Fixed Assets & Current Assets
- 7. Fixed Assets ◦ Acquired for relatively longer periods ◦ Not meant for resale ◦ Helps in generating income ◦ Eg: Machinery, Land, Building, etc.
- 8. Current Assets ◦ Held for short period, usually less than one year. ◦ Acquired with the intention of converting them into cash or consumed during the normal operating business cycle. ◦ Also called Floating / Circulating Assets. ◦ Eg: Debtors, Stock in hand, etc.
- 9. Liabilities ◦ Obligations or debts of the organization. ◦ Amount of money payable to others. ◦ Its also called as creditors equity. Liabilities may be classified into Long term Liabilities & Short term liabilities.
- 10. Long-term Liabilities ◦ Payable after a long period (usually more the one year). ◦ Eg: Debentures, Long-term Loans, etc. Short-term Liabilities o Payable with in a period of one year. o Eg: Bills Payable, Outstanding Expenses, etc.
- 11. Capital ◦Investment made by owners. ◦May be in the form of cash / assets ◦Also termed as net worth / owners equity.