The balance sheet-financial statement, Financial Accounting

THE BALANCE SHEET

It shows the financial position of the company as at the end of a given financial period. The standard requires that assets and liabilities should be classified between current and non-current portions.

Currently, the standard requires the first part of the balance sheet to show the total assets (i.e. non-current assets + current assets) and the second part of the balance sheet to show equity and liabilities. Equity is the shareholders funds while liabilities are the total of non-current and current liabilities.

Most of the balance sheet items are shown in totals and the breakdown of the figures is given by way of notes to the accounts. E.g. property, plant and equipment which is made up of land, buildings, plant and machinery and motor vehicles is given in the balance sheets at the total net  book values of all there assets and part of the notes to the accounts will explain the make-up  of the assets and movements during the year.

No workings should be given/shown in the balance sheet for most of the items and only the total or the net figures should be presented e.g. accounts receivables should be net of provision for doubtful debts.

IAS 32 requires that redeemable preference shares should be treated as a non-current liability just like any other loan. Therefore, the preference dividends are shown as part of finance costs in the income statement, and other accrued interest and shown as part of current liabilities.

If the company proposes dividends on ordinary and preference share capital before the year end then, this will be provided for in the statements of changes in equity and shown as part of current liabilities in the balance sheet.  However, even the proposed dividends on disclosed after the financial year end, then they will be mentioned only by the way of notes to he accounts and not provided for in the financial statement.

Posted Date: 12/12/2012 12:02:49 AM | Location : United States







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