Through my course of college, I have been working on Financing, Accounting, and other fun facts that I did not clearly understand before. Now that I have understood the basic and more complex topics of Financing and Accounting I thought I would share some of this general knowledge by starting with Current and Non-Current Assets and Liabilities. Below are some examples of these and an explanation as to why they are in such category.
- Finished goods inventory – Current asset, will be sold and converted to cash with a year
- Raw materials - Current Asset, will be converted to finished goods with a year
- Bank loan with a repayment date three years from today – non-current liability – 3 years
- Bank loan with a repayment date six months from today – current liability – due with a year
- Outstanding receivables from products sold – current asset- will be converted to cash within a year
- Depreciation expense – profit and loss statement, expenses go on the P&L (Profit & Loss)
- Salary expense for employees – profit and loss statement, expenses go on the P&L
- Interest expense (payable to bank for loans) – profit and loss statement, expenses go on the P&L
- Money owed to a supplier for raw materials purchased – current liability, to be paid with a year
- Dividends to be paid to shareholders two months from today – current liability, to be paid with a year
- Retained earnings – equity by definition
- Shareholder’s paid-in capital – equity by definition
- Machinery and equipment – non-current asset, lasts more than a year
- Accrued salaries and related expenses such as payroll taxes – profit and loss statement, expenses go on the P&L
- Income tax to be paid to the US government one month from today – current liability, to be paid with a year
- Cash and cash equivalents – current asset, by definition
- Building – non-current asset, lasts more than a year
- Goodwill – non-current asset- lasts more than a year
- Bonds payable to be paid in 15 months non-current liability – greater than a year
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