Accounting Ch. 5 - Balance Sheets

Current Liabilities (definition)

Liabilities that are expected to be paid within one year or one operating cycle, whichever is longer.

Long term liabilities (definition)

Liabilities that are not classified as current (due after one year).

Current assets are presented in the order of ______________.

Liquidity

Long-Term Investments:

Long Term Investments in Stocks & Bonds Investment in Subsidiary Land Held for Investment Bond Sinking Fund

Property Plant & Equipment (definition)

Long-term assets that are used in operations and that are expected to prove benefits for more than one year. Examples are land, building, equipment, machinery, automobiles, and leased property.

Intangible Assets (definition)

Long-term assets that lack physical substance.

Intangible Assets:

Patents Goodwill Organization Costs

Assets (Definition)

Probable future economic benefits obtained or controlled by the entity as a result of past transactions or events.

Any premium or discount on bonds payable should be shown _______ ______ ___________ ______ __________ _________.

With the related bond payable account

Retained Earnings may be shown separately for ______________ and ___________________ amounts.

appropriated and unappropriated

For Capital Stock - Required disclosures include the number of shares _________, __________, _______ __________________.

authorized, issued, and outstanding.

To be listed as cash on the balance sheet, the cash must be ______________ ______ _________________ __________. (i.e., not restricted for other purposes.)

available for current use

Short term investments in ____________ _______________ (short-term investments in the stock of another company) are generally reported at __________ _______________ with any changes in fair value reported at net income.

equity securities fair value

Short-Term investments are generally reported at ________ _________.

fair value

Intangible assets should be shown _______ ___ _____ _________________ ______________________ although the accumulated amortization account is usually not shown separately.

net of any accumulated amortization

Accounts receivable are reported at ______________ _______________ __________________ (gross amount less allowance for uncollectibles)

net realizable value

7 Examples of current liabilities are

1. Accounts Payable 2. Salaries Payable 3. Taxes Payable 4. Unearned Revenue 5. Accrued Liabilities 6. Advances from Customers 7. Current Maturity of Long-Term Debt

6 Examples of Long-Term Liabilities

1. Bonds Payable 2. Mortgage Payable 3. Long-Term Notes Payable 4. Long-Term Lease Liabilities 5. Pension Obligations 6. Deferred Tax Liabilities

8 Examples of Current Assets

1. Cash and Cash Equivalents 2. Accounts Receivable 3. Notes Receivable 4. Short-Term Investments 5. Marketable Securities 6. Inventory 7. Supplies 8. Pre-Paid Expenses

2 Examples of Capital Stock are

1. Common Stock 2. Preferred Stock

5 Categories of Assets

1. Current Assets 2. Long-Term Investments 3. Property Plant and Equipment 4. Intangible Assets 5. Other Assets

2 Sub-categories for Liabilities

1. Current Liabilities 2. Long-term Liabilities

6 examples of other assets

1. Deferred Charges 2. Deferred income tax debits 3. Property held for re-sale. 4. Restricted cash or securities 5. Abandoned Factory Buidings 6. Other Long-Term Assets

3 separate portfolios for debt securities

1. Held-to-maturity Securities 2. Trading Securities 3. Available-for-sale securities

4 examples of long-term investments

1. Investment in securities such as investments in stocks & bonds of other companies. 2. Long-term investments in fixed assets that are not currently used in operations. (such as land held for speculation) 3. Long-term investments in subsidiaries or affiliated companies. 4. Investments of cash set aside in special funds, such as pension fund, bond sinking fund, or plant expansion fund.

6 Examples of Property, Plant and Equipment

1. Land 2. Building 3. Equipment 4. Machinery 5. Automobiles 6. Leased Property

6 Examples of Intangible Assets are

1. Patents 2. Copyrights 3. Trademarks 4. Goodwill 5. Franchises 6. Organizational Costs

3 Characteristics of assets reported in Property Plant and Equipment

1. The assets are long-term. 2. The assets are currently used in operations. 3. The assets are of a durable, or physical nature.

Two important characteristics of an asset:

1. There must be some future economic benefit that is expected. 2. There must have been a past transaction or event that has given rise to the asset.

Other Assets:

Abandoned Factory Buildings Deferred Tax Assets Other Long Term Assets

Current Liabilities:

Accounts Payable Short Term Notes Payable Salaries Payable Unearned Revenue Current Portion of Long Term Debt

Other Assets (definition)

Assets that do not fit into any of the other four categories. An example would be an abandoned factory building.

Held-to-maturity securities (definition)

Investments in debt securities that the company has a positive intent and ability to hold to the date of maturity. (Should be reported at cost.)

Long Term Liabilities:

Bonds Payable Long Term Lease Liabilities Pensions Obligations Deferred Tax Liabilities

Capital Stock (definition)

Capital Stock represents the par value of the stock held by the owners of the corporation. There would be a separate capital stock account for each type of stock issued by the company.

Current Assets:

Cash and Cash Equivalents Accounts Receivable Less Allowance for Uncollectibles Short Term Investments Inventory Supplies Prepaid Expenses

Current Assets (Definition)

Cash and other assets that are expected to be converted to cash, used up, or sold within one year or one operating cycle, whichever is longer.

Stockholders Equity

Common Stock Preferred Stock Additional Paid in Capital - Common Stock Additional Paid in Capital - Preferred Stock Retained Earnings Accumulated Other Comprehensive Income Less Treasury Stock Equity Attributable to XYZ Company Plus Equity Attributable to Non controlling Interest

Prepaid items are reported at ______________.

Cost

If an asset is not expected to be converted to cash or used to pay a liability within one year or one operating cycle, then it should not be reported as a ______________ _____________. (For example cash set aside for a long-term purpose.)

Current assets

Available-for-sale securities

Debt securities that are not classified as held-to-maturity or trading. (Should be reported at fair value.)

Trading Securities (definition)

Debt securities that the company has bought and held primarily for sale in the near future. (Should be reported at fair value.)

Property, Plant, and Equipment:

Equipment Less Accumulated Depreciation Buildings Less Accumulated Depreciation Land

Paid-in-capital in excess of par -

Represents the amount over par value that the capital stock originally sold for.

Retained Earnings -

Represents the total amount of earnings of the company to date that have been retained in the business.

Non-controlling Interest (Minority Interest) -

The portion of the total stockholder's equity of subsidiaries not wholly owned by the reporting company.

Accumulated Other Comprehensive Income -

The total amount of the "other comprehensive income items" from the income statement that are not included in retained earnings.

Treasury Stock -

Treasury stock represents capital stock of the company that has been repurchased by the company.

Cash is usually lister first and includes ____________________ ______ ____________ as well as most ___________________ _________ ____________________ ___________.

currency on hand checking and Saving accounts

To be classified as current liabilities must: a. Be intended to be settled with _____________ ___________ or ______________ _______________ ___________. b. Be intended to be settled within __________ _____________ or _________ _____________ __________, whichever is longer.

current assets or another current liability one year or one operating cycle

Treasury stock has a __________ balance, and is shown on the balance sheet as a ___________ _________ __________ ______________ _____________.

debit deduction from total stockholders equity.

Short term investments in ______________ ______________may be grouped into three separate portfolios for reporting purposes.

debt securities

Long-term investments (definition)

investments that are intended to be held for more than one year (not classified as current).

Inventory is reported at ______________ ______ ______________ ______ ____________.

lower of cost or market

"Cash equivalents" are ________-________ __________________ (such as treasury bills), with a maturity of _______ __________ _____ _________.

short-term investments 3 months or less