FADM Ch3 Assignemnt

Classify each of the items as an asset, liability; revenue; or expense from the company's viewpoint. Also indicate the normal account balance of each item.

The accounting equation: Assets = Liabilities + Owner’s Equity. Assets are the resources of the company. Examples include cash, land, buildings, and equipment. Liabilities are “outsider claims”, the company’s obligations to creditors. Examples include accounts payable, notes payable, and income taxes payable. Owner’s Equity represents “insider claims” of the company or the owner’s share of the assets. If a business is keeping accurate records this equation should always be in balance.

* Statement of net assets (Balance sheet) presentation required classification of current and non-current of assets and liabilities. Equity section presents: Net Assets Invested in Capital Assets, Care Organizations Net of Related Debt, Restricted Net Assets, and Unrestricted Net Assets.

a. Arrange the following asset, liability, and owner’s equity elements of the accounting equation: Cash, Accounts Receivable, Office Furniture, Van, Accounts Payable, Common Stock/Dividends, and Revenues/Expenses. (See Exhibit 1.5)

The four different types of assets are Current Assets, Long-Term Assets, PPE (Property, Plant & Equipment), and Intangible Assets. Team B’s task was to define current assets. A current asset is an asset which can either be converted to cash or used to pay current liabilities within one year. Typical current assets include

Asset Account – Can be organized into current and non-current category. Types of current accounts would be goods owned by a company with the result of selling items or a written note(s) receivable, in which a promise is made to repay services rendered. A non-current item is any item used for the efficient running of a company such as equipment like computers. This referred to as a fixed asset. (MyAccountingCourse.com, n.d.)

17. If common stock is issued for an amount greater than par value, the excess should be credited to

7. Debt to capitalization = Long-term Debt in Balance Sheet / Long term debt + Net Assets in

2. For the most recent year, what is the amount of inventory in the balance sheet? What does this amount represent?

Does not prescribe a particular format. A liquidity presentation of assets and liabilities is used, instead of a current/ non-current presentation, only when a liquidity presentation provides more relevant and reliable information. Certain minimum items are presented on the face of the balance sheet. Does not prescribe a particular format. A current/noncurrent presentation of assets and liabilities is used unless a liquidity presentation provides more relevant and reliable information. Certain minimum items are presented on the face of the balance sheet.

In this week we are turning our attention towards the remaining major component of the balance sheet – owners’ equity. Like liabilities, owners’ equity represents another form of financing for a business. At first glance, liabilities (capital provided by creditors) and owners’ equity (capital provided by owners or shareholders) may look very different. As we delve deeper into the topic, however, you will

The last one is the Balance Sheet which tells a person the lists of assets he has, the list of

Balance Sheet: Balance sheet is a convenient means of organizing and summarizing what a firm owns (its assets), what a firm owes (its liabilities), and the difference between the two (the firm’s equity) at a given point of time. The accounting equation, also known as the balance sheet identity, is the basis of accounting system: Assets= Liability + Stockholder’s Equity.

Balance Sheet: The balance sheet is also referred to as Statement of Financial Position. The Balance sheet at a particular point in time reports a company’s financial position. The balance sheet has both right and left sides. The left-hand side of the balance sheet takes the company’s assets into consideration because the assets are what they use in generating their income. The right-hand side, however, has the company’s liability and the stockholder’s equity. In a nutshell, a balance sheet indicates what is owned and owed by a company. According to Parrino and Kidwell (2012), “the balance sheet identity can thus be stated as follows:

When entering information onto the equity portion of the balance sheet, you should include the value of any capital stock that has been issued, any additional payments or capital from investors beyond the par value of the stock, and the net income that has been kept by the business rather than distributed to owners and shareholders.