O slideshow foi denunciado.
Seu SlideShare está sendo baixado. ×

THE BALANCE SHEET

Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Anúncio
Próximos SlideShares
ACCOUNTING FOR FIXED ASSETS
ACCOUNTING FOR FIXED ASSETS
Carregando em…3
×

Confira estes a seguir

1 de 27 Anúncio

THE BALANCE SHEET

Baixar para ler offline

Helps in understanding balance sheets, the accounting concepts underlying them and the terms associated. Covers the dual aspect, going concern and entity concept. Terms explained include assets, liabilties, owners equity, fixed assets, current assets, current liabilities, long term debt, historical cost, book value, net realizable value and fair value. Also covers paid in capital, additional capital, retained earnings.

Helps in understanding balance sheets, the accounting concepts underlying them and the terms associated. Covers the dual aspect, going concern and entity concept. Terms explained include assets, liabilties, owners equity, fixed assets, current assets, current liabilities, long term debt, historical cost, book value, net realizable value and fair value. Also covers paid in capital, additional capital, retained earnings.

Anúncio
Anúncio

Mais Conteúdo rRelacionado

Mais recentes (20)

Anúncio

THE BALANCE SHEET

  1. 1. THE BALANCE SHEET © 2023 Dr. Meera Sharma
  2. 2. AUTHOURED BY DR. MEERA SHARMA © 2023 Dr. Meera Sharma
  3. 3. TABLE OF CONTENTS THE BALANCE SHEET FIXED ASSETS ACCOUNTING CONCEPTS OTHER ASSETS ENTITY LIABILITIES GOING CONCERN CURRENT LIABILITIES THE COST CONCEPT NON CURRENT LIABILITIES DUAL ASPECT OWNERS’ EQUITY ASSETS CURRENT ASSETS © 2023 Dr. Meera Sharma
  4. 4. THE BALANCE SHEET  STATEMENT OF FINANCIAL POSITION  DETAILS THE RESOURCES OWED AND RESOURCES OWNED  A list of the assets, liabilities, and owners’ equity as of a specific date © 2023 Dr. Meera Sharma
  5. 5. THE BALANCE SHEET • ASSETS – RESOURCES FROM WHICH FUTURE ECONOMIC BENEFITS ARE LIKELY TO FLOW IN • Eg. Cash, machinery, investments, inventory • LIABILITIES – OBLIGATIONS WHOSE SETTLEMENT IS LIKELY TO RESULT IN AN OUTFLOW OF RESOURCES • Eg. Long term and short term loans • EQUITY – RESIDUAL INTEREST OF OWNERS IN ASSETS AFTER DEDUCTING ALL LIABILITIES • Includes paid in capital and retained earnings © 2023 Dr. Meera Sharma
  6. 6. THE BALANCE SHEET  OWNERS’ EQUITY AND LIABILITIES ARE SOURCES OF FUNDS  ASSETS ARE APPLICATIONS OF FUNDS  SOURCES OF FUNDS SHOULD EQUAL APPLICATIONS OF FUNDS © 2023 Dr. Meera Sharma
  7. 7. ACCOUNTING CONCEPTS • ACCOUNTING CONCEPTS BEHIND BALANCE SHEET CONSTRUCTION 1. ENTITY 2. GOING CONCERN 3. COST 4. DUAL ASPECT © 2023 Dr. Meera Sharma
  8. 8. ENTITY • AN ORGANIZATION IS AN INDEPENDENT ENTITY • ACCOUNTING RECORDS ARE ALWAYS KEPT FOR THE ENTITY ON AN INDEPENDENT BASIS • ONE ENTITY COULD BE PART OF ANOTHER, NECESSITATING CONSOLIDATED ACCOUNTS © 2023 Dr. Meera Sharma
  9. 9. GOING CONCERN • AN ORGANIZATION IS A GOING CONCERN • IT WILL CONTINUE TO OPERATE INDEFINITELY, IS NOT LIKELY TO BE LIQUIDATED IN THE NEAR FUTURE • THIS IMPLIES THAT RESOURCES NEED NOT BE REPORTED AT THEIR CURRENT MARKET VALUE OR LIQUIDATION VALUE © 2023 Dr. Meera Sharma
  10. 10. THE COST CONCEPT • ALL ASSETS ARE INITIALLY RECORDED AT THEIR COST OF ACQUISITION, ALSO CALLED HISTORICAL COST • THEIR SUBSEQUENT VALUATION DEPENDS ON THE TYPE OF ASSET, VIZ MONETARY OR NON MONETARY, FIXED OR CURRENT © 2023 Dr. Meera Sharma
  11. 11. THE COST CONCEPT • NON MONETARY ASSETS  FIXED ASSETS LIKE PLANT AND EQUIPMENT  INVENTORY LIKE FINISHED GOODS OR RAW MATERIAL © 2023 Dr. Meera Sharma
  12. 12. THE COST CONCEPT • NON MONETARY ASSETS  FIXED ASSETS CONTINUE TO BE SHOWN AT COST SUBSEQUENT TO ACQUISITION  HOWEVER, THEIR VALUE IS DEPRECIATED OVER THEIR LIFETIME TO MATCH THE EXPENDITURE INCURRED ON THEM WITH THE ANNUAL REVENUE EARNED BY THEIR USE © 2023 Dr. Meera Sharma
  13. 13. THE COST CONCEPT • NON MONETARY ASSETS  INVENTORY IS VALUED AT LOWER OF COST AND NET REALIZABLE VALUE  NET REALIZABLE VALUE IS THE ESTIMATED SELLING PRICE IN THE ORDINARY COURSE OF BUSINESS LESS THE ESTIMATED COSTS OF COMPLETION AND THE ESTIMATED COSTS NECESSARY TO MAKE THE SALE © 2023 Dr. Meera Sharma
  14. 14. THE COST CONCEPT • MONETARY ASSETS  INVESTMENTS  RECEIVABLES  PREPAID EXPENSES © 2023 Dr. Meera Sharma
  15. 15. THE COST CONCEPT • MONETARY ASSETS  MOST MONETARY ASSETS ARE SHOWN AT FAIR VALUE SUBSEQUENT TO ACQUISITION  FAIR VALUE IS THE PRICE THAT WOULD BE RECEIVED TO SELL AN ASSET IN AN ORDERLY TRANSACTION BETWEEN MARKET PARTICIPANTS AT THE MEASUREMENT DATE © 2023 Dr. Meera Sharma
  16. 16. THE COST CONCEPT • BOOK VALUE IS THE VALUE AT WHICH THE ASSET SHOWS ON THE BALANCE SHEET  USUALLY BOOK VALUE IS THE DEPRECIATED HISTORICAL COST OR THE NET REALIZABLE VALUE IN CASE OF NON MONETARY ASSETS  AND THE FAIR VALUE IN CASE OF MONETARY ASSETS © 2023 Dr. Meera Sharma
  17. 17. DUAL ASPECT  EVERY TRANSACTION OF AN ENTERPRISE HAS A DUAL IMPACT  THIS IS CAPTURED THROUGH DOUBLE ENTRY  DOUBLE ENTRY ENSURES THAT THE BASIC ACCOUNT EQUATION HOLDS, i.e.  ASSETS = LIABILITIES + OWNERS’ EQUITY  INCOME STATEMENT TRANSACTIONS ALSO TIE INTO THIS EQUATION SINCE REVENUES INCREASE OWNERS’ EQUITY AND EXPENSES DECREASE OWNERS EQUITY © 2023 Dr. Meera Sharma
  18. 18. ASSETS • ASSETS • ECONOMIC RESOURCES CONTROLLED BY AN ENTITY – CURRENT ASSETS – FIXED ASSETS – OTHER ASSETS © 2023 Dr. Meera Sharma
  19. 19. CURRENT ASSETS • CURRENT ASSETS  EXPECTED TO BE CONSUMED OR SOLD WITHIN AN OPERATING CYCLE OR A YEAR, WHICHEVER IS LONGER  OPERATING CYCLE IS THE TIME TAKEN TO CONVERT INVENTORY INTO CASH • EXAMPLES  CASH  MARKETABLE SECURITIES  RECEIVABLES  INVENTORIES  PREPAID EXPENSES © 2023 Dr. Meera Sharma
  20. 20. FIXED ASSETS • FIXED ASSETS  AN ASSET HELD WITH THE INTENTION OF BEING USED FOR PRODUCING GOODS OR SERVICES AND NOT HELD FOR SALE IN THE NORMAL COURSE OF BUSINESS  ACCOUNTED FOR AT HISTORICAL COST NET OF ACCUMULATED DEPRECIATION  EXAMPLES  PLANT AND EQUIPMENT © 2023 Dr. Meera Sharma
  21. 21. OTHER ASSETS • OTHER ASSETS  INVESTMENTS  INTANGIBLE ASSETS © 2023 Dr. Meera Sharma
  22. 22. LIABILITIES • LIABILITIES  PRESENT OBLIGATIONS DUE TO PAST EVENTS WHOSE SETTLEMENT IS LIKELY TO RESULT IN AN OUTFLOW OF RESOURCES © 2023 Dr. Meera Sharma
  23. 23. LIABILITIES • LIABILITIES ARE REPORTED AT THE AMOUNT REQUIRED TO SATISFY THE OBLIGATION AS ON THE BALANCE SHEET DATE © 2023 Dr. Meera Sharma
  24. 24. CURRENT LIABILITIES  CURRENT LIABILITIES  PAYABLES  ACCRUED EXPENSES (EXPENSES INCURRED BUT NOT DUE FOR PAYMENT)  UNEARNED REVENUE (ADVANCE PAYMENTS FROM CUSTOMERS)  CURRENT PORTION OF LONG TERM DEBT (PORTION OF LONG TERM DEBT MATURING WITHIN A YEAR © 2023 Dr. Meera Sharma
  25. 25. NON CURRENT LIABILITIES • NON CURRENT LIABILITY  LONG TERM DEBT  DEBT THAT MATURES IN MORE THAN ONE YEAR © 2023 Dr. Meera Sharma
  26. 26. OWNERS’ EQUITY • OWNERS’ EQUITY  RESIDUAL INTEREST IN ASSETS AFTER DEDUCTING LIABILITIES  PAID-IN CAPITAL  ADDITIONAL PAID-IN CAPITAL OR PREMIUM  RETAINED EARNINGS CUMULATIVE INCOME RETAINED IN BUSINESS SINCE INCEPTION © 2023 Dr. Meera Sharma
  27. 27. OWNERS’ EQUITY  PAID-IN CAPITAL  AMOUNT OF RESOURCES CONTRIBUTED BY OWNERS FOR OWNERSHIP STAKE IN THE COMPANY AT PAR VALUE  ADDITIONAL PAID-IN CAPITAL OR PREMIUM  AMOUNT OF RESOURCES CONTRIBUTED BY OWNERS IN EXCESS OF PAR VALUE © 2023 Dr. Meera Sharma

×