Harvey Norman and JB Hi-Fi financial compariosn

Current liabilities are defined as: “Debts due to be paid with cash or with goods and services within one year, or within the entity’s operating cycle if the cycle is longer than a year.” (Hongren, Harrison & Oliver, 2012) These liabilities fit into three categories: Current liabilities of known amount; current liabilities that must be estimated; and contingent liabilities. According to the matching principle of accounting, expenses and revenues need to be reported during the same period that they are earned. This can be difficult if the exact amounts are not known. This is the purpose behind estimated and contingent liabilities. In order to provide accurate financial reports companies must record revenues and

Current assets - Cash and other resources that companies reasonably expect to convert to cash or use up within one year or the operating cycle, whichever is longer. Current liabilities - Obligations that a company reasonably expects to pay within the next year or operating cycle, whichever is longer. Current ratio - A measure used to evaluate a company's liquidity and short-term debt-paying ability; computed as current assets divided by current liabilities. Debt to total assets ratio - Measures the percentage of total financing provided by creditors; computed as total debt divided by total assets. Earnings per share (EPS) - A measure of the net income earned on each share of common stock; computed as net income minus preferred stock dividends divided by the average number of common shares outstanding during the year. Economic entity assumption - An assumption that every economic entity can be separately identified and accounted for. Financial Accounting Standards Board (FASB) - The primary accounting standard-setting body in the United States.

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

A current liability is defined as a liability that must be paid within one accounting period.

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.

Financial statements depict a picture of the financial well-being of a business and are used for financial performance analysis (Nelson, 1942; Stichler, 2008). First, the statement of financial position consists the assets that are owned by the HCO, the liabilities that the HCO has to the outsiders, and a portion of the HCO’s assets that belong to its owners (Finkler et al., 2013). It is a balance sheet indicating what the HCO has and what the HCO owes at a specific

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.)

This research paper is prepared for purposes of assessing financial condition as well as overall operating performance of two same sector entities.

Current liabilities are “obligations that must be settled within 1 year or the operating cycle, whichever is longer” and are “usually satisfied by transferring a current asset.” (). It includes accounts payable; short-term notes payable, income tax payable, accrued expenses, and portion on long-term debt payable.

Liabilities are obligations that are the responsibility of the company and can be in the forms of loans that the company needs to pay or services that the company still needs to provide (Merritt, 2016). Liabilities are broken down into two main categories, current liabilities and long term liabilities (McClure, n.d.). Current liabilities are those obligations that will come due within the next year, while long term liabilities typically come due in the future, but not within the next 12 months (McClure, n.d.).

The accounting equation is, Assets are equal to Liabilities plus Stockholders’ Equity. Assets are resources owned by a business. Liabilities are the debts and obligations of the business. Liabilities represent claims of creditors on the assets of a business. Stockholders’ equity represents the claims of owners on the assets of the business. This equity is divided into two parts: common stock and retained earnings. The balance sheet reports assets and claims to assets at one specific point in time. Claims to assets are subdivided into two categories: claims of creditors and claims of owners. The accounting equation must always balance. Each transaction has a dual effect on the equation. As an example if an individual asset is increased,

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

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

An auditor would be interested in the above section, but just as important would be the Investing and Financing Activities sections. Auditors need to know where the company invested its money and where it received its money in order to figure out whether

A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of