We provide below 9 aspects about the financial statements which will make you the blue eyed boy of your boss. Check the terminologies which hold importance below:
Prepaid Expenses - All payments are not made when due. Many payments, such as insurance premia, rent and service costs, are made in advance for a period of time which may be 3 months, 6 months, or even a year. The portion of such expenses that relates to the next accounting period are shown as prepaid expenses in the Balance Sheet.
Cash & Bank Balances - Cash in hand in petty cash boxes, safes and balances in bank accounts are shown under this heading in the Balance Sheet.
Loans & Advances - These are loans that have been given to other corporations, individuals and employees and are repayable within a certain period of time. This also includes amounts paid in advance for the supply of goods, materials and services.
Other Current Assets - Other current assets are all amounts due that are recoverable within the next twelve months. These include claims receivable, interest due on investments and the like.
Current Liabilities - Current liabilities are amounts due that are payable within the next twe
lve months. These also include provisions which are amounts set aside for an expense incurred for which the bill has not been received as yet or whose cost has not been fully estimated.
Creditors - Trade creditors are those to whom the company owes money for raw materials and other articles used in the manufacture of its products. Companies usually purchase these on credit - the credit period depending on the demand for the item, the standing of the company and market practice.
Accrued Expenses - Certain expenses such as interest on bank overdrafts, telephone costs, electricity and overtime are paid after they have been incurred. This is because they fluctuate and it is not possible to either prepay or accurately anticipate these expenses. However, the expense has been incurred. To recognize this the expense incurred is estimated based on past trends and known expenses incurred and accrued on the date of the Balance Sheet.
Provisions - Provisions are amounts set aside from profits for an estimated expense or loss. Certain provisions such as depreciation and provisions for bad debts are deducted from the concerned asset itself. There are others, such as claims that may be payable, for which provisions are made. Other provisions normally seen on balance sheets are those for dividends and taxation.
Sundry Creditors - Any other amounts due are usually clubbed under the all-embracing title of sundry creditors. These include unclaimed dividends and dues payable to third parties.
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Prepaid Expenses - All payments are not made when due. Many payments, such as insurance premia, rent and service costs, are made in advance for a period of time which may be 3 months, 6 months, or even a year. The portion of such expenses that relates to the next accounting period are shown as prepaid expenses in the Balance Sheet.
Cash & Bank Balances - Cash in hand in petty cash boxes, safes and balances in bank accounts are shown under this heading in the Balance Sheet.
Loans & Advances - These are loans that have been given to other corporations, individuals and employees and are repayable within a certain period of time. This also includes amounts paid in advance for the supply of goods, materials and services.
Other Current Assets - Other current assets are all amounts due that are recoverable within the next twelve months. These include claims receivable, interest due on investments and the like.
Current Liabilities - Current liabilities are amounts due that are payable within the next twe
lve months. These also include provisions which are amounts set aside for an expense incurred for which the bill has not been received as yet or whose cost has not been fully estimated.
Creditors - Trade creditors are those to whom the company owes money for raw materials and other articles used in the manufacture of its products. Companies usually purchase these on credit - the credit period depending on the demand for the item, the standing of the company and market practice.
Accrued Expenses - Certain expenses such as interest on bank overdrafts, telephone costs, electricity and overtime are paid after they have been incurred. This is because they fluctuate and it is not possible to either prepay or accurately anticipate these expenses. However, the expense has been incurred. To recognize this the expense incurred is estimated based on past trends and known expenses incurred and accrued on the date of the Balance Sheet.
Provisions - Provisions are amounts set aside from profits for an estimated expense or loss. Certain provisions such as depreciation and provisions for bad debts are deducted from the concerned asset itself. There are others, such as claims that may be payable, for which provisions are made. Other provisions normally seen on balance sheets are those for dividends and taxation.
Sundry Creditors - Any other amounts due are usually clubbed under the all-embracing title of sundry creditors. These include unclaimed dividends and dues payable to third parties.
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