logo

Fundamentals of Accounting Assignment

   

Added on  2020-05-16

6 Pages733 Words217 Views
Running head: FUNDAMENTALS OF ACCOUNTINGFundamentals of AccountingName of the StudentName of the UniversityAuthor’s Note

1FUNDAMENTALS OF ACCOUNTINGTable of ContentsAnswer to Question 1......................................................................................................................2Answer to Question 2......................................................................................................................3References........................................................................................................................................4

2FUNDAMENTALS OF ACCOUNTINGAnswer to Question 1Six terms associated with balance sheet liabilities and equity is discussed below:Current Liabilities: It refers to all short-term debts and bills that the companies are planning topay within net 12 months. Long-term Liabilities: These are the debts that the companies own to their lenders and thecompanies are planning to pay them over a period more than 12 months (Higgins, 2012).Retained Earnings: This refers to the amount of earnings of the companies reinvested in thebusiness operations after deducting the necessary distribution to the shareholders like payment ofdividends and others.Reserves: It refers to the extra amount money the shareholders of the companies pay apart fromthe par value of shares (Higgins, 2012). Issued Capital: This refers to the face value of the shares issued to the shareholders by thecompanies and it represents the total amount invested by the shareholders.Goodwill: It is an intangible assets and it can be derived from the difference between the price ofa company as going concern and the fair market value of that company.The Balance Sheet provides the summary of a company’s assets, liabilities and equity fora specific point of time; and the investors, lenders and creditors use this for judging the overallfinancial health of the organization. Thus, the above discussed items helps in depicting theoverall financial position like liquidity and other position of the companies (Healy & Palepu,2012). For this reason, they should be included in the balance sheet of the companies.

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
FINC20018 - Managerial Finance Assignment
|8
|2705
|78

Accounting Fundamentals: Income Statement, Balance Sheet, and Ratio Analysis
|11
|2118
|457

Accounting Fundamentals: Financial Statements, Ratios, and Analysis
|17
|2407
|188

Accounting Fundamentals: Income Statement, Balance Sheet, and Ratio Analysis
|13
|1328
|55

Assignment | The primary reason the annual report is important in finance is that it is used by investors
|7
|2292
|27

Preparation of P&L and Balance Sheet with Ratio Analysis
|12
|2281
|225