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Department
Management (MGT)
Course
MGTA02H3
Professor
Chris Bovaird
Semester
Winter

Description
Lecture 5: Accounting Balance sheet (page 84) -Balance sheets supply detailed information about the accounting equation -They show the firms financial position, and its assets, liabilities and owners equity at a particular time -an economic snapshot, applies at one time when it was made up, financial position of a business at that moment. -a look at what kind of assets we have and liabilities we have to pay and if anything is left over for ownerus Assets -Current assets -fixed assets -Intangible assets - List in order from easein turning them into cash, they are liquid assets, can be converted into cash within a year. So start at the beginning with cash. Next would be marketable securities, invested bonds in another company. Third one accounts receivable Assets- Current or Liquid Assets -assets that can be converted into cash in one year -Cash -Marketable securities -Accounts receivable a bill issued to a customer and within a 30 days period they will pay you, g generate it by selling stuff -Inventory of finished goods want to sell but havent put out for sale - Prepaid expenses paid rent a head of time, in advance Fixed Assets -These have long-term use for more than one year - Land - Buildings -equipment -you carry the market inventory at the cost or fair market value, general rule. If value of stuff bought has fallen you adjust the cost down, if it has increased you do not adjust the cost up. Fixed assets -These assets wear out -So the value must be depreciated or decreased each year -You may reduce the value by the useful life and take off that amount each year -An example of this is an automobile, if go to buy a used car will not pay more who bought it new. When buy a car worth 70% of what paid for. Used car, a car depreciates to 70%. Equipment wares out so depreciate it; have to have a line in balance sheet for depreciation. Intangible Assets - Assets purchased (not developed) from outside the business -Intangibles like patents, trademarks if purchased -Goodwill that reflects the difference between the price paid for a business and its asset value www.notesolution.com
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