會計英語--第6章--Liabilities-and-Owner’s-Equity課件

1、會計英語6.1 Current Liabilities6.1.1 Definition of Current LiabilitiesCurrent liabilities are those obligations that are reasonably expected to be paid by using current assets or by creating other current liabilities. Current liabilities can be accounts payable, short-term notes payable, unearned revenu

2、e, short-term borrowings, accrued liabilities, dividends payable, the current portion of long-term debt, and so on. .Chapter 6 Liabilities and Owners EquityAccounts payable usually refers to the amount due for the purchase of materials by a manufacturing company or merchandises by a merchandising co

3、mpany. Accounts payable are usually not recorded when purchase orders are placed, but when legal right to the goods passes to the buyer. If goods are in transit at the year end, the purchase also should be recorded if the shipment terms indicate that the ownership of goods has been passed.6.1.2 Acco

4、unts PayableShort-term notes payable are obligations in the form of written promissory notes. Short-term notes payable may be either interest-bearing or non-interest-bearing.In theory, short-term notes payable should be recorded at the present value of the cash outflows associated with the note.6.1.

5、3 Short-term Notes PayableShort-term notes payable are obligations in the form of written promissory notes. Short-term notes payable may be either interest-bearing or non-interest-bearing.In theory, short-term notes payable should be recorded at the present value of the cash outflows associated with

6、 the note.6.1.4 Unearned RevenueShort-term borrowings usually arise from cash borrowings and are generally payable to banks or loan companies. It is from financing activity Its repayment period is usually between thirty days to one year. At the maturity date, the borrowing company repays the princip

7、al as well as the interest subordinated to the principal.6.1.5 Short-term BorrowingsAccrued liabilities arise from the recognition of expenses to be paid in a future period.It is also called accrued expenses.Examples of accrued liabilities include taxes payable, interest payable, and employee compen

8、sation payable.6.1.6 Accrued Liabilities1. Taxes Payable Show the amount that the entity owes government offices for taxes.2. Interest PayableCost of borrowing and increases with the passage of time.3. Employee Compensation PayableEvery business incurs a number of accrued liabilities relating to pay

9、roll. The largest of these liabilities is the obligation to pay employees for their services rendered during the period. Dividend payable is a liability that is created when the board of directors of a corporation declares to pay dividends to its stockholders. It is listed as a current liability bec

10、ause dividends are usually paid within several weeks of declaration.6.1.7 Dividend PayableSome long-term debt are payable in a series of monthly or quarterly installments. In these cases, the long-term debt will be firstly listed as one of the non-current liabilities in the balance sheet when it inc

11、urs. Then as its maturity date approaches, the portion due within one year or one operating cycle will be listed as a current liability, and the remainder of it will still be a non-current liability. 6.1.8 Current Portion of Long-term ObligationNon-current liabilities, also called Long-term liabilit

12、ies, are liabilities with a future benefit and will be mature in over one year. In accounting, the long-term liabilities are shown on the right side of the balance-sheet representing the sources of long-term funds. Examples of non-current liabilities are long-term borrowings, bonds payable, long-ter

13、m notes payable, pension plan and other non-current liabilities.6.2 Non-Current LiabilitiesLong-term borrowings are generally payable to banks or loan companies, but its repayment period is longer than one year or one operating cycle. It is also related to the financing activity in cash flow stateme

14、nt.6.2.1 Long-Term BorrowingsThe issuance of bonds payable is the equivalent of splitting a large loan into a great many of unit, which is called bond. Each bond is essentially a long-term interest-bearing note payable.There are many different types of bonds, such as mortgage bonds, debenture bonds,

15、 convertible bonds, callable bonds, registered bonds, coupon bonds, etc.6.2.2 Bonds PayableLong-term notes payable is similar to short-term notes payable except that its repayment period exceeds one year or one operating cycle. A long-term note may be secured by a mortgage that pledge title to speci

16、fic assets to secure the note. 6.2.3 Long-Term Notes PayableA pension plan is a contract between a company and its employees under which the company agrees to pay retirement benefits to eligible employees.As pension obligation accrues, the company could record them by a debit to Pension Expense acco

17、unt and a credit to cash account. If all required payments are made promptly to the pension fund trustee, no liability needs to be represented in the financial statements.6.2.4 Pension PlansThere are three typical types of organizations: Sole ProprietorshipPartnershipcorporation6.3 Types of Organiza

18、tionA sole proprietorship, also known as a sole trader or a proprietorship, is a type of business entity that is owned and ran by a natural person. There is no legal distinction between its owner and the business. 6.3.1 Sole ProprietorshipAdvantages of a sole proprietorship(1) It is easy to create.

19、When create a sole proprietorship, there is no need to negotiate with others or to be agreed by them and there is no need of too much registered capital either.(2) The fixed cost to maintain a sole proprietorship is relatively low.(3) No need to pay corporate income tax.Disadvantages of a sole propr

20、ietorship(1) The owner takes unlimited responsibility for all its losses and debts and then bears a big risk.(2) The existence of a sole proprietorship is influenced by the life of its owner.(3) It is hard to gain a lot of money for daily operatingA partnership is an arrangement where two or more pa

21、rties, known as partners, agree to cooperate to advance their mutual interests. Partners in a partnership may be individuals, firms, profit-making organizations, schools, government offices or their combinations. A partnership may issue and holding equity or be governed only by a contract. It can be

22、 subdivided into ordinary partnership and limited liability partnership.6.3.2 PartnershipA corporation can be defined as an “artificial person”, which is invisible, intangible and created by law with an independent legal personality and a perpetual existence. Corporation is the main form of modern c

23、ompanies and its two typical subcategories are limited liability corporations and incorporated corporations.6.3.3 CorporationOwners equity is the residual interest in the assets of an entity after reducing its liability. Stockholders equity is normally the term used to present owners equity for a bu

24、siness organized in the form of a corporation. Equity presents only residual claims to net assets, after all liabilities have been fully satisfied. 6.4 Owners EquityStockholders are the owner of a company.The ownership of a corporation can be divided into capital stock，capital reserve and retained e

25、arnings. Capital stock is the amount of shares authorized for issuance by the corporations charter, including both common stock and preferred stock. The interest of stockholder is determined by the number of shares held by him or her.6.4.1 Rights of StockholdersThe basic rights of common stock :(1)

26、Voting right(2) Dividend and liquidation participation right(3) First refusal rightThe basic rights of preferred stock :(1) Preference to dividends(2) Preference to assetsRetained earnings are net income that a company retains in the business. The balance of retained earnings is part of the stockholders claim on the total assets of the corporation. 6.4.2 Retained EarningsA dividend is a distribution by a corporation to its stockholders on a pro rata basis. In practice, the two predominating forms of dividends are