Balance Sheet-Lialibity

Lialibity

LIABILITY can be further divided into 2 parts:

  1) NON-CURRENT LIABILITY :

       Liability that must be paid off to debtors in more than one year .
  2) CURRENT LIABILITY :

      Liability that must be paid off to debtors within one year.

Components of Non-Current Liability:
  1) LONG TERM NOTE PAYABLES : 

      Money owed by company to creditors with formal agreement. Examples are

      long term borrowing, bond issued by company.
  2) DEFERRED TAX LIABILITY : 

      Tax that had been paid less in the past.

Components of Current Liability:
  1) TRADE PAYABLES :  

       Money owed by company to suppliers
  2)  NOTE PAYABLES :

       Money owed by company to creditors with formal agreement. Examples are

       short term borrowing.
  3) ACCRUED EXPENSES :

      Expenses that had been used but haven't  pay.
  4) UNEARNED REVENUE : 

      Payments received but company has not provided good or services yet.
  5) DEFERRED TAX LIABILITY :

      Tax that had been paid less in the past.

Balance Sheet- Asset

Asset

ASSET can be further divided into 2 parts:

    1. NON-CURRENT ASSET : 

        Asset that can not be turned into money within one year
    2. CURRENT ASSET : 

        Asset that can be turned into money within one year

Component of Non-Current Assets:

    1. PROPERTY, PLANT, AND EQUIPMENT(PPE) : 

        Tangible asset that can be used to generate profit and last more than one years.

        Examples are building, equipment, machinery, furniture and land. 
    2. CONSTRUCTION IN PROGRESS :

        Buildings that are in the process of constructing.

    3. INVESTMENT PROPERTY :

        Property that are used to receive rental income or value appreciation and 

        not used for production or administration purpose.

    4. INTANGIBLE ASSET :

        Asset without physical appearance. Examples are patent, license, trademarks.
    5. GOODWILL :

        When company acquired another firm, the different between buy price and

         the excess value of that firm(asset-liability) is goodwill.
    6. FINANCIAL ASSET :  

        Financial security that will not be sold within one year. Examples are bonds 

        hold for maturity.
    7. DEFERRED TAX ASSET : 

       Tax that had been paid more in the past or tax incentive that can be used  for

       tax reduction in futures.

Components of Current Assets:

    1. INVENTORY :

       Goods that will eventually be sold to customers. For  example: raw materials , 

       work-in-progress and finished goods.
    2. TRADE AND OTHER RECEIVABLES :

        Money owed by customers to company.
    3. PREPAID EXPENSE :

        Expense that had been paid in advance but not been used.
    4. MARKETABLE SECURITY :  

        Financial security that can be changed into cash within one year.

        Examples are stocks, bonds, bank notes, treasury bills.
    5. CASH AND CASH EQUIVALENTS :

        Consists of cash and deposits in banks.

Balance Sheet- Equity

Equity

Components of Equity
  1) SHARE CAPITAL : 

      Money collected by issuing shares through IPO or right issues. 

  2) SHARE PREMIUM :

      Excess amount received by a firm over the par value of its shares during IPO.

  3) TREASURY SHARES :

      Company repurchases its own shares.
  4) RETAINED EARNINGS : 

      Cumulative earnings of company from previous years.

  5) OTHER RESERVES :

      Reserves that had been set aside for other purposes.
  6) NON-CONTROLLING INTEREST :

      Equity interest owed by minority shareholders in subsidiaries firms which are

       not wholly owned by company.

Financial Report- Balance Sheet

Balance Sheet

Balance Sheet (also called Statement of Financial Position) consists of three things:
     1 ASSET : Total valuable things that company owned
     2 LIABILITY : Money borrowed from debtors
     3 EQUITY: Money received from shareholders and previous years earnings

The relationship between these three things are:

ASSET= LIABILITY+ EQUITY

*A company use the money borrowed from creditors (LIABILITY) and money 

 received from shareholders and previous years earnings(EQUITY) to buy 

 valuable things (ASSET)

ASSET can be further divided into 2 parts:
    1 NON-CURRENT ASSET : Asset that can not be turned into money 

                                                  within one year
    2 CURRENT ASSET : Asset that can be turned into money within one year

LIABILITY can be further divided into 2 parts:
    1 NON-CURRENT LIABILITY : Liability that must be paid off to debtors in 

                                                       more than one year
    2 CURRENT LIABILITY : Liability that must be paid off to debtors within 

                                              one year.

Financial Report-Income Statement

Income Statement

Components of Income Statement:

  1) REVENUE : Price x Quantity
  2) COST OF GOOD SOLD : Direct costs involved in producing  products.   

       Examples are materials, direct labour, factory overhead such as electricity 

       bill and depreciation of machines.
  3) GROSS PROFIT : REVENUE - COST OF GOOD SOLD
  4) OTHER OPERATING PROFIT : Other incomes from direct sales of

      products such as sales of electricity and rental fees from unused spaces

      from building used for operation.

  5) OPERATING EXPENSE :  Indirect expense incurred other than direct cost 

       such as general & administrative expenses, sales & distribution expenses,  

       promotion expenses, research expenses.
  6) OPERATING PROFIT :  GROSS PROFIT +

      OTHER OPERATING PROFIT - OPERATING EXPENSE

  7) FINANCIAL PROFIT (also called Non-Operating Profit) : Profit that are 

      generated from non-operating activities. Examples are interest received, 

      gain from selling securities.

  8) FINANCIAL EXPENSE (also called Non-Operating Expense) : Expense that

       are not included in operating activities. Examples are interest paid, lost from

       selling securities.
  9) PROFIT BEFORE TAX (PBT) : OPERATING PROFIT +

      FINANCIAL PROFIT - FINANCIAL EXPENSE

  10) INCOME TAX : Tax paid to government based on profit before tax (or more

        accurate taxable income)
  11) NET PROFIT FROM CONTINUING ACTIVITIES : 

        PROFIT BEFORE TAX - INCOME TAX
  12) NET PROFIT FROM DISCONTINUED ACTIVITIES : Gain/ Loss from 

        liquidating one of the sectors of the company
  13) OTHER COMPREHENSIVE INCOMES : Mainly consist of three factors 

        that not added into the profit. Examples are Gain/ Loss from foreign 

        currency, gain/loss from hedging, unrealised gain of available-for-sales 

        securities.

  14) TOTAL COMPREHENSIVE INCOMES : NET PROFIT +

         OTHER COMPREHENSIVE INCOMES