Case Study

According to AASB 116 Property, plant and equipment held beyond the normal operating cycle of entity are deemed to be non-current assets. Here’s the extract from the report.

Accounts payable - The management of debt incurred and not yet paid. All invoices, statements and operational expenses are included.

Fixed assets are assets that will be held or used over a period longer than one year. Companies typically have land, equipment, and buildings as their fixed assets. The account is usually called property, plant, and equipment or PP&E.

All of these liabilities are of known amounts and must be recorded as liabilities until the point in time when they are paid. Some liabilities, however, have amounts that are not known and must be estimated.

31.  Current liabilities are amounts that must be paid within a short period of time, usually less than a year.  TRUE

d) What is the difference between long-term debt and notes payable? A notes payable is normally a short term debt whereas a long-term debt is typically over a time frame of more than one accounting period or longer.

| (TCO D) The basis for classifying assets as current or noncurrent is conversion to cash within

Accounts payables are short term debts a company owes to its creditors. Notes payables are usually written contracts and long term debts companies have promises to pay its creditors. Accrued expenses are recognized by a company before they are paid for. An example of this would be a tax bill received from the town or city the company is located in. While all of these are recognized as current liabilities on a company’s financial reports they are all recorded in different time frames. Account payables are recognized when they are incurred and the payment of them is also due at the same time. Where both Notes payables and Accrued expenses are shown in the current liabilities but are due at a future date

Notes receivable represent claims for which formal instruments of credit are issued as evidence of debt. A credit instrument

Fixed assets might have been acquired at a time when prices were high and now the prices have corrected substantially. But in the balance sheet the assets are yet shown at their book value less depreciation written off.

The current assets are those which are readily convertible into cash and cash equivalents due to their highly liquid nature and also form part of working capital of the company’s operations. However, the long term assets in contrast are not liquid because since they have a useful life of more than a year and hence their full value cannot be easily realized within

Moreover, from the analyse tab and the function “Age”, an aging of the Accounts Receivable was performed.

Require officers who have borrowed money from the company to repay the amounts owed at December 31. This would convert into cash the “notes receivable from officers,” which now appear in the balance sheet as noncurrent assets. The loans could be renewed immediately after year-end.

Assets in the financial statement are always required and show useful information to investors and understand where the information comes from. For instance, accounts receivable net which the organization does not expect to collect all of the money it is due from all patients and insurers, (Finkler, S.A., Ward, D.M. & Calabrese, I.D., 2013). The bad debts become about of the money due. Furthermore, accounts receivables, net represents gross charges less an allowance for poor debts, and many contractual allowances established with those third party payers. Typically, an example of a bad debt would show charges of a large sum of money delivered from a hospital. Then, the contractual allowances from

One of these is with regards to goodwill and intangible assets with identifiable useful lives.