Accounts receivable are also called “trade receivable”.

Accounts receivable often have an "allowance for bad debt expense"

or "allowance for doubtful accounts" as a contra account.

Accounts payable are also called “trade payable”.

 Liquidity based
Assets
presentation of the SFP
Equity and Liabilities
Current assets:
Cash & cash equivalents
Marketable securities Liabilities
Short term investments
Accounts receivable Short term notes payable
-allowance for doubtful accounts
Inventory
Accounts payable
Prepaid expenses Current maturity of long-term debts
Supplies Taxes payable
Deferred tax asset Wages payable
Long term Investments
Share investments,
Interest payable
Investment in affiliates (accounted for Unearned revenue
using the equity method).
Investment property
PPE
Bonds payable
Land Bank loans
Buildings Long term notes payable
Equipment
Intangible assets
Goodwill
Patents
Copyrights
Trademarks and trade name
Equity
Franchises and Licences
 Classified
Assets
statement of financial position
Equity and Liabilities
Current assets:
Cash & cash equivalents
Marketable securities Liabilities
Short term investments
Accounts receivable Current liabilities
-allowance for doubtful accounts
Inventory
Short term notes payable
Prepaid expenses Accounts payable
Supplies Current maturity of long-term debts
Deferred tax asset Taxes payable
Long term Investments
LT HTM
Wages payable
Available for sale securities Interest payable
Investment in affiliates (accounted for Unearned revenue
using the equity method).
Investment property
PPE Non current liabilities
Land Bonds payable
Buildings
Equipment
Bank loans
Intangible assets Long term notes payable
Goodwill
Patents
Copyrights
Trademarks and trade name Equity
Franchises and Licences
• Current assets reveal information about the
operating activities of the firm.

• Noncurrent assets provide information about

the firm's investing activities, which form the
foundation upon which the firm operates.
a. Current assets:

[Link] and cash equivalents

ii. Marketable securites
iii. Short term investments (Sort term Held-to-
Maturity (HTM) securites& Trading Securities)
[Link] receivable
[Link]
[Link] current assets
ii. Marketable securities.
Marketable securities generally refer to an investment
in commercial paper, banker's acceptances or Treasury
bills (financial assets traded in a public market and
whose value can be readily determined). Thus, these
securities are highly liquid, and generally provide the
company a bit of a return on its investment - likely just
enough to keep up with inflation.

Details of the investment are disclosed in the financial

footnotes.
[Link] term investments:
[Link] term Held-to-maturity securities
[Link] securities
• NB: It is about Debt securities other than commercial paper, banker's
acceptances or Treasury bills
NB: Readily convertible to cash commercial
paper, banker's acceptances or Treasury bills
are classified as marketable securities.
• NB:
Cash & Cash equivalents
Marketable securities are considered short
term financial assets
Trading securities
Short term Held-to-Maturity securities
Accounts receivable
• [Link] receivable :
Accounts receivable (also known as trade
receivables) are financial assets that represent
amounts owed to the firm by customers for
goods or services sold on credit.
Accounts receivable are reported at net realizable value,
which is based on estimated bad debt expense. Bad debt
expense increases the allowance for doubtful accounts, a
contra-asset account.

A contra account is used to reduce the value of its

controlling account.

Thus, gross receivables less the allowance for doubtful

accounts is equal to accounts receivable at net realizable
value, the amount the firm expects to collect.

When receivables are "written off" (removed from the

balance sheet because they are uncollectable), both gross
receivables and the allowance account are reduced.
• Firms are required to disclose significant
concentrations of credit risk, including
customer, geographic, and industry
concentrations in the financial footnotes.
• vi. Other current assets.
Other current assets are amounts that may
not be material if shown separately; thus, the
items are combined into a single amount.
Examples include supplies, prepaid expenses
and deferred tax assets (see chapter 2).
• NB: Securities are not classified as
intangible assets.
3- Investment in affiliates

When a company holds approximately 20 to 25% or more

of another company's stock, it is considered to have
significant control, which signifies the power one company
can exert over another company. This power includes
representation on the board of directors, partaking in
company policy development and the interchanging of
managerial personnel.

When the equity method is used to account for ownership

in a company, the investor records the initial investment in
the stock at cost and that value is periodically adjusted to
reflect the changes in value due to the investor's share in
the company's income or losses.
4- Property Investment : includes assets that generate rental income or
capital appreciation (Example: Long term assets such as a land or
buildings that a company is not using in its operating activities and
that could be sold in the future (investment in real estate))
• NB:
Long term Held-to-Maturity securities are considered long
Available-for-sale securities term financial assets
Investment in affiliates
 Liquidity based
Assets
presentation of the SFP
Equity and Liabilities
Current assets:
Cash & cash equivalents
Marketable securities Liabilities
Short term investments
Accounts receivable
-allowance for doubtful accounts
Inventory
Prepaid expenses Equity
Supplies
Deferred tax asset
Long term Investments
LT HTM
Available for sale securities
Investment in affiliates (accounted for
using the equity method).
Investment property
PPE
Land
Buildings
Equipment
Intangible assets
Goodwill
Patents
Copyrights
Trademarks and trade name
Franchises and Licences
 Current liabilities are obligations that will be
satisfied within one year or one operating cycle,
whichever is greater. More specifically, a liability
that meets any of the following criteria is
considered current:
•Settlement is expected during the normal
operating cycle.
• Settlement is expected within one year.
• Held primarily for trading purposes.
• There is not an unconditional right to defer
settlement for more than one year.
Noncurrent liabilities do not meet the criteria
of current liabilities.

Noncurrent liabilities provide information

about the firm's long-term financing activities.
viii. Deferred tax liability (see chapter 2)
• NB: Notes payable and current portion of
long-term debt. Notes payable are obligations
in the form of promissory notes owed to
creditors and lenders. Notes payable can also
be reported as noncurrent liabilities if their
maturities are greater than one year.
• Unearned revenue is also known as unearned
income, deferred revenue, or deferred
income.
 Liquidity based
Assets
presentation of the SFP
Equity and Liabilities
Current assets:
Cash & cash equivalents
Marketable securities Liabilities
Short term investments
Accounts receivable
Current liabilities
-allowance for doubtful accounts Accounts payable
Inventory Short term notes payable
Prepaid expenses Current maturity of long-term debts
Supplies
Taxes payable
Deferred tax asset
Long term Investments Wages payable
LT HTM Interest payable
Available for sale securities Unearned revenue
Investment in affiliates (accounted for
using the equity method). Deferred tax liability
Investment property
PPE
Non current liabilities
Land Bonds payable
Buildings LT Bank loans
Equipment
Intangible assets
Long term notes payable
Goodwill Equity
Patents
Copyrights
Trademarks and trade name
Franchises and Licences
 Liquidity based
Assets
presentation of the SFP
Equity and Liabilities
Current assets:
Cash & cash equivalents
Marketable securities Liabilities
Short term investments
Accounts receivable
Current liabilities
-allowance for doubtful accounts Accounts payable
Inventory Short term notes payable
Prepaid expenses Current maturity of long-term debts
Supplies
Taxes payable
Deferred tax asset
Long term Investments Wages payable
LT HTM Interest payable
Available for sale securities Unearned revenue
Investment in affiliates (accounted for
using the equity method). Deferred tax liability
Investment property
PPE
Non current liabilities
Land Bonds payable
Buildings LT Bank loans
Equipment
Intangible assets
Long term notes payable
Goodwill Equity
Patents
Copyrights
Trademarks and trade name
Franchises and Licences
 Revenue represents inflows of economic resources and includes:
• Sales (or service) revenue: Revenue from the firm's day-to-day
activities. They are inflows from delivering or producing goods,
rendering services, or other activities that constitute the entity's
ongoing major or central operations (in the normal course of
business).

• Gains. Increases in assets from transactions incidental to the firm's

day-to-day activities. Any time a company produces profit or
realizes increased value through secondary sources, such as
litigations, or disposal of assets ,it is called a gain.

• Investment income such as interest and dividend income.

Expenses : are mainly the cost of assets consumed or services
used in the process of earning revenue from the company’s
ongoing major or central operations during the reporting
period (a year for example)). Expenses are especially
composed of:
• Operating costs:
 The cost of goods (assets) consumed in the operating process
during the reporting period (Ex: Cost of raw materials used in the
operating activities; Depreciation and amortization of non current
assets,…
 the cost of services used in the operating process during the
reporting period (Ex: wages expense, pension expense, telephone
expense, delivery expense (gasoline, repairs,…), utilities expense
(electric, gas and water expense), rent expense, supplies expense,
insurance expense…),
 Interest expense incurred during the reporting period (a year for
example) :(interests on debts),
• Tax expense
• Losses. Decreases in assets from transactions incidental to the
firm's day-to-day activities.
• NB: a loss is realized whenever a company
loses money through secondary activity. If a
company sells an asset, the determination of
gain versus loss is dependent on the book
value of the asset (the value of the asset in the
company’s accounting books) according to the
company's financial documents.
• NB: For example, a nonfinancial firm may receive
dividends and interest from investments in other
firms. The investment income and any gains and
losses from the sale of these securities are not a
part of the firm's normal business operations.
Interest expense is based on the firm's capital
structure, which is also independent of the firm's
operations. Conversely, for a financial firm,
investment income and financing expenses are
usually considered operating activities.
 Liquidity based
Assets
presentation of the SFP
Current assets:
Equity and Liabilities
Cash & cash equivalents
Marketable securities
Short term investments
Liabilities
Accounts receivable
-allowance for doubtful accounts Current liabilities
Inventory Accounts payable
Prepaid expenses
Supplies Short term notes payable
Deferred tax asset Current maturity of long-term debts
Long term Investments
LT HTM Taxes payable
Available for sale securities
Investment in affiliates (accounted for using the equity
Wages payable
method). Interest payable
Investment property
PPE Unearned revenue
Land
Buildings
Deferred tax liability
Less accumulated depreciation
Equipment Non current liabilities
Less accumulated depreciation
Intangible assets
Bonds payable
Goodwill LT Bank loans
Patents
Less accumulated amortization Long term notes payable
Copyrights
Less accumulated amortization Equity
Trademarks and trade name
Less accumulated amortization
Franchises and Licences
Less accumulated amortization
 Liquidity based
Assets
presentation of the SFP
Current assets:
Equity and Liabilities
Cash & cash equivalents
Marketable securities
Short term investments
Liabilities
Accounts receivable
Less allowance for doubtful accounts Current liabilities
Inventory Accounts payable
Prepaid expenses
Supplies Short term notes payable
Deferred tax asset Current maturity of long-term debts
Long term Investments
LT HTM Taxes payable
Available for sale securities
Investment in affiliates (accounted for using the equity
Wages payable
method). Interest payable
Investment property
PPE Unearned revenue
Land
Buildings
Deferred tax liability
Less accumulated depreciation
Equipment Non current liabilities
Less accumulated depreciation
Intangible assets
Bonds payable
Goodwill LT Bank loans
Patents
Less accumulated amortization Long term notes payable
Copyrights
Less accumulated amortization Equity
Trademarks and trade name
Less accumulated amortization Common stock (capital)
Franchises and Licences
Less accumulated amortization
Retained earnings (accumulated)