Академический Документы
Профессиональный Документы
Культура Документы
Measuring and
reporting financial
position
Learning Objectives
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
2009
Balance
date
2010
2009
Cash at bank
12 000
37 000
55 000
Accounts receivable
12 000
14 000 Mortgage
10 000
10 000
Inventory
30 000
28 000 Loans
45 000
45 000
Motor vehicles
40 000
92 000
110 000
Buildings
80 000
82 000
68 000
174 000
178 000
Total assets
174 000
If ABC Ltd has assets totalling $980 000, and liabilities totalling $630 000,
then the amount of equity must be $350 000
A
$980,000 =
L
$630,000
$350,000
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Assets
Main characteristics:
A probable future economic benefit
The business has exclusive right to control the benefit
The benefit must arise from some past transaction or event
The asset must be capable of reliable measurement in monetary
terms
Important: All four conditions must apply
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Assets
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Assets
Assets may be:
Tangible (a physical substance, e.g. land)
OR
Intangible (have no physical substance, e.g. patent)
Examples of assets
Land, machinery, fixtures and fittings, patents and
trademarks
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Liabilities
Claims against assets of the business other than
those of owner(s)
Recognition criteria (similar to assets):
o probable that an outflow will occur
o capable of reliable measurement in monetary
terms
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Liabilities
Examples of liabilities
Accounts payable, staff entitlements, loans and other credit facilities, and
other social or moral obligations, provision for employee bonuses or
owners distribution
Provision
Estimated liability, greater uncertainty regarding the amount or timing of
the amount than for a normal liability, e.g. warranty provisions
Contingent liability
Potential liability that might arise if a particular event occurs
Not recognised in financial position until the event actually occurs
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Equity
Examples of equity:
o
o
o
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Horizontal format
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Example 2.2
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Vertical format
Two approaches within vertical format:
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Example 2.3
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Operating cycle
The businesss operating cycle is the time between
the acquisition of the assets and their ultimate
realisation in cash or cash equivalents
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Non-current
accounts receivable
office equipment
inventory
short-term investments
motor vehicles
land
plant and machinery
goodwill
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Classification of liabilities
they are due to be settled within a year after the date of the
relevant statement of financial position, and/or
Non-current
accounts payable
mortgage loan
bank overdraft
long-term loans
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Accounting conventions
The principles, assumptions or accepted ideas on
which accounting rules, records and reports were or
are based
Known as GAAP (generally accepted accounting
principles)
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Accounting conventions
Business entity convention For accounting
purposes, the business and its owner(s) are treated
as separate and distinct
Historic cost convention Assets should be recorded
at their historic (acquisition) cost or equivalent
Prudence convention Holds that caution should be
exercised when making accounting judgements; often
means anticipating losses but only recognising
realised profits
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Accounting conventions
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e
Copyright 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781486008797/Atrill/Accounting: An Introduction 6/e