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Financial Accounting Concepts
Pages 2 (502 words)
Current assets are composed of cash and equivalents such as marketable securities which are easily convertible to cash. The assets also include account receivables which are the unpaid bills owed to the company. In addition, there is also the inventory which in the case of WMT may represent the product stocks.
The intangible assets lumped in one account is also listed under the non-current assets. This account may represent the patents, trademarks, reputation, skilled management or well-trained labor force of the company. It should be noted that some accountants are averse to record this type of assets unless they can be promptly valued (Brealey, Myers & Marcus, 1995).
The liability section of the balance sheet, along with the shareholders' equity, shows the financial resources utilized for the procurement of assets (Brealey, Myers & Marcus, 1995). Similar to assets, liabilities are also classified into current and non-current liabilities, obligations which are due in the short-term and long-term, respectively.
Non-current liability accounts of WMT in the balance sheet include long-term debt and other non-current liabilities, which represent the WMT's loans from banks and investors which are not immediately due. Furthermore, deferred income tax is accounted for in the balance sheet. As the name suggests, this is the outstanding income tax due which will have to be paid to the government. This section also includes the account for minority interest which is the liability of the company to investors with non-controlling stake or interest over the company.
On WMT's balance sheet as at end-2004 shown in MSN Money, only the commo ...
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