This will include salaries, shipping, insurance, utilities, rent, compensation for executives, etc. Net Interest Expense represents the total Interest paid on Debt liabilities, net of the total Interest received on Cash assets. Tax Expense represents the amount of taxes paid. From the perspective of a financial analyst, the most important Balance Sheet line items fall into the following categories: Cash Asset : Money owned by the company.
For accounting purposes, Cash generally includes currency and coins on hand, checking account balances, and undeposited customer checks. Current Assets: Assets whose value is expected to translate into Cash in the near future generally within one year.
Cash is a Current Asset. Other or Long-term Assets: Assets whose value will not translate into Cash in the near future outside of one year. Debt Liability : An obligation almost always interest-bearing that represents borrowed money that the company must repay. Debt is usually part of Long-Term Liabilities see below , although any portion of Debt which must be repaid within the next year will be classified as a Current Liability. Current Liabilities: Liabilities that a company must meet via payment in the near future generally within one year.
Other or Long-term Liabilities: Liabilities that do not need to be met via payment in the near future outside of one year. This includes earnings delivered by the company as well as payments collected from its customers.
Cash Flow from Financing Activities CFF includes the Cash inflows from shareholders and lenders as well as the outflows of dividends or sales of stock.
Items found in this line item will include: Dividends Paid, Cash raised via the sale of Common Stock, Cash proceeds from Borrowings Debt , and repayment of Debt obligations. Amortization: Some other Long-term Assets Balance Sheet are amortized similar to being depreciated over a period of time; this is expensed on the Income Statement. Physical assets, such as machines, equipment, or vehicles, degrade over time and reduce in value incrementally.
Unlike other expenses, depreciation expenses are listed on income statements as a "non-cash" charge, indicating that no money was transferred when expenses were incurred. Accumulated depreciation is recorded on the balance sheet.
This item reflects the total depreciation charges taken to date on a specific asset as it drops in value due to wear and tear or obsolescence. When depreciation expenses appear on an income statement, rather than reducing cash on the balance sheet, they are added to the accumulated depreciation account.
Doing so lowers the carrying value of the relevant fixed assets. But, this approach also presents a dilemma. In a very busy year, Sherry's Cotton Candy Company acquired Milly's Muffins, a bakery reputed for its delicious confections.
After the acquisition, the company added the value of Milly's baking equipment and other tangible assets to its balance sheet. It also added the value of Milly's name-brand recognition, an intangible asset, as a balance sheet item called goodwill.
Depreciation is a very real expense. In theory, depreciation attempts to match up profit with the expense it took to generate that profit. He has authored articles since , covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management. By Marquis Codjia. Cash Flow Vs. Depreciation Depreciating an asset means gradually reducing its worth every year until the resource's value is zero or another amount that finance people call "salvage value.
Accumulated Depreciation Accumulated depreciation is the total depreciation expense a business has applied to a fixed asset since its purchase. Thus, the differences are: Period covered. When do intangible assets appear on Relevant assertion definition. Copyright
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