Accounting if fun! (introduction question)

mooshoepork

Hey everyone.

I was doing this introduction to accounting simple balance sheet and I have a quick question regarding current and non-current liabilities.

Now, I know a current liability is the outflow of assets within 12 months for past transactions.

Out of this list, what is a CL?

• cost of goods sold $20,000
• administrative expenses $950
• rent of shop $12,000
• casual wages $1,500
• interest on loan $4,200
• cash at bank $110,800
• bank loan $60,000
• accounts payable $1,450
• display case (asset) $12,000 with depreciation of $1,200.

Now, I would have assumed that admin expenses, rent of shop and wages were, as they were paid in that year, and came from a past transaction (I'll pay you, if you work for me etc...) However, apparently only accounts payable is.

edit: wait, is it because acc payable is for an outside party? whereas the others are internal? What are the internal ones classified as then?

Fantasma

First, your statement looks very confusing, normally when you report a Balance Sheet you need to organize the different assets like this:

Fixed Assets

1.
2.

Deferred assets

1.
2.

Liabilities

1.
2.

Capital Account

1.
2.

Your report looks more like an Income Statement, also called a Profit and Loss Statement. In your case, Accounts payable is what would be considered Current Liabilities because they are pending. Now, do you have to pay the Bank loan before the end of the accounting cycle?, it the answer is yes, you include it also.

mooshoepork

Strange. We seem to do our balance sheets differently. I'm in Australia, so it might make a difference.

We usually have:
current assets
Non-current assets
current liabilities
Non-current liabilities.

Rook

mooshoepork wrote: »

Hey everyone.

I was doing this introduction to accounting simple balance sheet and I have a quick question regarding current and non-current liabilities.

Now, I know a current liability is the outflow of assets within 12 months for past transactions.

Out of this list, what is a CL?

• cost of goods sold $20,000
• administrative expenses $950
• rent of shop $12,000
• casual wages $1,500
• interest on loan $4,200
• cash at bank $110,800
• bank loan $60,000
• accounts payable $1,450
• display case (asset) $12,000 with depreciation of $1,200.

Now, I would have assumed that admin expenses, rent of shop and wages were, as they were paid in that year, and came from a past transaction (I'll pay you, if you work for me etc...) However, apparently only accounts payable is.

edit: wait, is it because acc payable is for an outside party? whereas the others are internal? What are the internal ones classified as then?

Accounts payable is money you owe people, and as such it's a Current Liability
All the other ones you've listed are things you've already paid for, and will be profit and loss.

The bank loan would be a long term liability.

mooshoepork

Thanks for that. I was confused a bit at first. Cheers