There is a direct and intimate relationship between Liabilities and Equity: the more Liabilities, the less Equity, and vice versa. If there is not enough Equity, then the corporation, small business or proprietorship has to obtain on credit merchandise for resale or needed supplies & services, or has to borrow. If the liability […]
The Current Liabilities accounts generally and commonly used are: Accounts Payable, Notes Payable, Accrued Interest Payable, current portion of Loans Payable, payables to the government (e.g., taxes, social security premiums, etc).
The portion of Loans Payable not due within the year is normally separated from the current portion and is an account under Noncurrent Liabilities. […]
As in the Assets portion of a Balance Sheet where the accounts are categorized into Current and Noncurrent, Liabilities have similar categories. However, it is often the case that the accounts are not categorized but listed all together.
Liabilities are used by a corporation, a proprietorship or small business, or by an individual or household […]
From the discussions of the generally and commonly used listing of Assets in a Balance Sheet (posts 7 through 9), the basic accounting equation can thus be re-stated in more detail:
All these Assets came into the possession of the corporation, small business, individual or household, either through borrowing money to acquire the asset (or borrowing […]
Among Noncurrent Assets which can have great value are Intangible Assets. These are long-lived assets which are not in physical form, but which are useful in the operations of a corporation or small business. These give the business a comparative advantage over others. Some examples are: a trademark or trade name, […]
Assets (appearing in the Balance Sheet of a corporation, a small business, a household or a person), generally and commonly categorized into Current and Noncurrent, consist in: Cash, Cash Equivalents or Near Cash, Short Term Investments, Accounts Receivable & Allowance for Bad Debts (each of which were discussed in the previous blog), Notes Receivable, […]
The most important in the set of Financial Statements (the Balance Sheet, the Income Statement, and the Cash Flow Statement) is the Balance Sheet where the basic accounting equation is stated:
Assets = Liabilities + Equity or […]
Nonaccountant corporate managers and employees, when reading and appreciating the Financial Statements of their corporate employer, should check if these actually give accurate feedback on past events, have useful predictive value on which to base decisions for the future, are timely (note the “as of x x x” caption of the Balance Sheet and the […]
When a nonaccountant corporate manager or employee reads the Financial Statements of his corporation, it is important to be able to read and appreciate his employer’s Financial Statements and know how well or how badly the corporation is doing. When an owner is presented his small business’ Financial Statements by his accountant or when […]
The Balance Sheet, the Income Statement, and the Cash Flow Statement –what accountants and the business world call “Financial Statements”– are built from / around the basic accounting equation:
Assets = Liabilities + Equity or […]
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