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    Balance Sheet Component Matching Solution: Account Description

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    nishant jindal
    This document provides descriptions of key balance sheet components including assets, liabilities, and shareholders' equity. Assets include current assets like accounts receivable, inventory, and cash as well as non-current assets like property, plant & equipment and intangible assets. Liabilities contain current liabilities such as accounts payable and income taxes payable, and non-current liabilities such as long-term debt and capital lease obligations. Shareholders' equity is made up of common stock, preferred stock, and retained earnings.

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    Balance Sheet Component Matching Solution: Account Description

    Uploaded by

    nishant jindal
    29 views3 pages
    This document provides descriptions of key balance sheet components including assets, liabilities, and shareholders' equity. Assets include current assets like accounts receivable, inventory, and cash as well as non-current assets like property, plant & equipment and intangible assets. Liabilities contain current liabilities such as accounts payable and income taxes payable, and non-current liabilities such as long-term debt and capital lease obligations. Shareholders' equity is made up of common stock, preferred stock, and retained earnings.

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    BalanceSheetComponentMatchingSolution-1454371969915

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    This document provides descriptions of key balance sheet components including assets, liabilities, and shareholders' equity. Assets include current assets like accounts receivable, inventory, and cash as well as non-current assets like property, plant & equipment and intangible assets. Liabilities contain current liabilities such as accounts payable and income taxes payable, and non-current liabilities such as long-term debt and capital lease obligations. Shareholders' equity is made up of common stock, preferred stock, and retained earnings.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    29 views3 pages

    Balance Sheet Component Matching Solution: Account Description

    Uploaded by

    nishant jindal
    This document provides descriptions of key balance sheet components including assets, liabilities, and shareholders' equity. Assets include current assets like accounts receivable, inventory, and cash as well as non-current assets like property, plant & equipment and intangible assets. Liabilities contain current liabilities such as accounts payable and income taxes payable, and non-current liabilities such as long-term debt and capital lease obligations. Shareholders' equity is made up of common stock, preferred stock, and retained earnings.

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    Balance sheet component matching solution

    Account Description
    Accounts receivable Customers who have purchased on credit
    – accounts to be collected.
    Income taxes payable Corporate taxes for the period that must
    be remitted to government.
    Long-term debt Borrowing for business – one or multiple
    loans where term is longer than 12
    months.
    Contingencies A potential future liability that the
    company can reasonably estimate (eg,
    from a pending lawsuit)
    Property, plant & equipment Physical assets used to generate income
    over a period of time greater than 12
    months. Include things such as
    buildings, furniture, computers, vehicles,
    manufacturing equipment.
    Inventory Goods either purchased or produced for
    sale to customers.
    Current portion of capital lease The amount owing over the next 12
    obligation months for capital lease payments.
    Cash and equivalents Cash or items that act like cash (eg, short
    term money market funds) that a
    business holds.
    Common shares/stock Shares held by investors in the company.
    These shares allow for voting rights and
    participation in profits.
    Current portion of long-term debt The amount of any loan(s) repayments
    due within the next 12 month period.
    Goodwill The premium paid on the acquisition of
    another business.
    Deferred income tax assets (expected to A timing difference due to the difference
    reverse in 12 months) between accounting income and taxable
    income. Difference will reverse in the
    next reporting period.
    Unearned revenue Revenues that have been collected from
    customers but have not yet been earned
    by the company (eg, performance of
    service has not yet occurred, or product
    has not yet been delivered).

    Corporate Finance Institute 33767 • 1


    Accounts payable Supplier invoices that relate to the current
    reporting period but that have not yet
    been paid.
    Retained earnings The accumulated profits and losses of the
    business since inception. If the company
    has more losses than profit, then this
    would be stated as “retained deficit”.
    Intangible assets Long term assets of the business that
    have no physical substance. Examples
    include licences, patents and
    trademarks.
    Capital lease obligation Capital leases are leases that are related
    to specific assets. They act the same as a
    loan – except instead of borrowing money
    to purchase the item outright, the
    company leases the asset – but all the
    benefits of ownership are substantially
    transferred through the lease.
    Accrued liabilities Liabilities that are related to the current
    reporting period but have not been paid.
    Typical accrued liabilities include
    compensation, audit and legal fees.
    Prepaid expenses Expenses that have been incurred where
    the service has not as yet been
    “earned”/delivered. Typical prepaid
    expenses include insurance, rent and
    utilities.
    Preferred shares/stock Shares purchased by investors that have
    fixed dividends that have a priority over
    common shareholders.

    Corporate Finance Institute 33767 • 2


    Balance sheet proforma

    ASSETS LIABILITIES

    Current assets Current liabilities


    Cash and equivalents Accounts payable
    Accounts receivable Accrued liabilities
    Inventory Unearned revenue
    Prepaid expenses Income taxes payable
    Deferred income tax asset Current portion of long-term
    debt
    Current portion of capital
    lease obligation

    Non-current assets Non-current liabilities


    Property, plant & equipment Long term debt
    Goodwill Capital lease obligation
    Intangible assets Contingencies

    Shareholders’ equity
    Common stock
    Preferred stock
    Retained earnings

    Corporate Finance Institute 33767 • 3

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