CURRENT ASSETS

Account Form

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Report Form

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 What is a balance sheet?
In accounting…..

Definition
Otherwise known as the Statement of Financial Position, the
Balance Sheet provides a snapshot of an entity’s assets and
liabilities - and therefore net worth - at a single point in time.
The Accounting Equation: Assets = Liabilities + Owner's Equity
It is called a balance sheet because, at any given moment, each
side of this equation must 'balance' out.
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 Contents:
Assets
– Current Assets
– Non-current or Fixed Assets
Contents of a Liabilities
– Current Liabilities
Balance sheet – Non-current or Long-term Liabilities
Owner’s Equity
– AKA Net Assets
– Capital
– Revenues
– Expenses
– Withdrawals
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 Current Assets
Definition

In accounting, current
assets are all the assets of
the company that can be
liquidated or converted
into cash within one fiscal
year (Hayes, 2019).

Current assets are also called Liquid Assets or Short-term Assets.

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 CRITERIA
(paragraph 66, IAS 1 Presentation of Financial Statements):

01 02 03 04
It is expected to be It is held primarily It is expected to be It is cash or a cash
realized in, or is
for the purpose of realized within equivalent, unless it is
intended for sale or
being traded; restricted from being
consumption in the twelve months after
exchanged or used to
entity’s normal the reporting settle a liability for at
operating cycle period; or least twelve months
from the end of the
reporting period.

All other assets that do not meet any of the foregoing criteria are
classified as non-current assets (Empleo & Robles, 2019).
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 LIST OF CURRENT ASSETS

Trade and
Inventory/
Non-trade other stock
receivables receivables
CASH Marketable
Prepaid Cash
securities
expenses equivalents

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 CASH
In accounting…..

Definition
Cash is considered as one of the most significant financial assets
because of its ability to settle an obligation, acquire another
asset, pay operating costs, or provide returns to enterprise
owners. (Robles & Empleo, 2019).
An item is considered as cash if it is acceptable by bank or other
financial institution for deposit at face value, which is at fair
value. 9
 4


 CASH
 Cash on Hand
Includes 2 components

Undeposited cash
collections
Working funds
currencies such as bills and coins,
cash funds segregated • Petty cash • Tax fund
customers’ checks, traveler’s checks, for current use in the fund • Interest
manager’s checks, cashier’s checks, ordinary conduct of • Change fund
business fund
bank drafts, money orders
• Payroll fund
• Dividend
fund 11
Cash in the Bank
• includes demand deposits
• There are unrestricted funds deposited
in a bank that can be withdrawn upon
demand such as amounts in checking
(or current) and savings account.

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 Cash Equivalents
In accounting…..

Definition
Cash equivalents are highly liquid financial instruments that are so
near their maturity and that there is insignificant risk of change in value
due to fluctuation of interest rates. They are generally presented in the
statement of financial position together with cash using the account
title “Cash and Cash Equivalents”.

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 Trade and other Receivables
In accounting…..

Definition
These are collectibles from customers, clients and other
persons for the goods, services or money given by the business.
(Manuel, 2017).

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 Trade and other Receivables
Examples

Accounts Receivable
• receivables from • receivables from
customers arising from
rendering of services or
sale of goods
• company has already
rendered services or
product to but has not yet
collected fully the cash
Notes Receivable Other receivables Allowance for Bad Debts
• Rent Receivable • a contra-asset
customers which are account deducted
• Interest Receivable from Accounts
backed up by
• Dividend Receivable Receivable
promissory notes
• represents the
• Etc.
estimated
uncollectible amount
of the receivable
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 Inventory
In accounting…..

Definition
Inventory refers to the goods and materials that are in stock. The three
most important types of inventory are raw material inventory, work in
progress inventory and finished goods inventory. A service business
normally has no inventory account, while a merchandising business
normally maintains one inventory account (Merchandise Inventory).
Moreover, a manufacturing business has several inventories: Raw
Material Inventory, Work in Progress Inventory, and Finished Goods
Inventory. 16
 Prepaid Expenses
In accounting…..

Definition
Prepayments consists of costs already paid, but are yet to be
used or incurred. These represent advance payments made for
benefits or services to be received by the business in the future.
Examples of these are (Office or Service) Supplies, Prepaid
Insurance and Prepaid Rent (Manuel, 2017).

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 Non-trade Receivables
In accounting…..

Definition
Non-trade receivables are amounts due for payment to an entity
other than its normal customer invoices for merchandise shipped
or services performed. Examples of non-trade receivables are
amounts owed to a company by its employees for loans or wage
advances, tax refunds owed to it by taxing authorities, or
insurance claims owed to it by an insurance company.

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 Other Current Assets
In accounting…..

Definition
This consists of other non-cash assets that are owed to the
company within one year. Companies often combine small
accounts into an “other” category.

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 BUSINESS NAME
Statement of Financial Position
As of December 31, 2019
ASSETS

Current Assets: Note

Cash and Cash Equivalents 1 ₱ xxx

Trade and other receivables 2 xxx

Merchandise Inventory xxx

Prepayments 3 xxx

Non-trade Receivables 4 xxx

Other Current Assets xxx ₱ xxx

Note 1 - Cash and Cash Equivalents

Cash ₱ xxx

Cash Equivalents ₱ xxx Note 4 - Non-trade Receivables

Marketable Securities xxx

Short-term Trust Funds xxx Advances to employees ₱ xxx

Treasury Bills xxx

Interest Receivable xxx
Short-term Commercial Paper xxx xxx

Cash and Cash Equivalents ₱ xxx

Dividends Receivable xxx

Note 2 - Trade and other receivables Claims for Tax Refunds or Rebates xxx
Accounts Receivable ₱ xxx

Less: Allowance for Doubtful Accounts xxx

Claims against common carriers for damaged
Add: Notes Receivable xxx
or lost goods xxx
Trade and other receivables ₱ xxx

Non-trade Receivables ₱ xxx

Note 3 - Prepayments

Prepaid Rent ₱ xxx

Prepaid Supplies xxx

Prepaid Insurance xxx

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Prepayments ₱ xxx
References

Empleo, P. & Robles, N. (2019). The Philippine Financial Reporting (Conceptual Framework and
Accounting Standards). Mandaluyong City: Millenium Books, Inc. p. 111-112.

Hayes, A. (2019, June 21). Current Assets Definition. Retrieved November 4, 2019, from
https://www.investopedia.com/terms/c/currentassets.asp.

Manuel, Z. (2017). 21st Century Accounting Process (Basic Concepts and Procedures). Quezon City:
Raintree Trading & Publishing, Inc. p. 190.

Robles, N. & Empleo, P. & (2019). The Intermediate Accounting Series Volume 1. Mandaluyong City:
Millenium Books, Inc. p. 111-112. P. 3-6.

Business Queensland. (2019). Understanding balance sheets. Retrieved October 30, 2019, from
https://www.business.qld.gov.au/running-business/finances-cash-flow/managing-money/financial-
statements-forecasts/balance-sheets

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