"NOTES" - shows the breakdown of the line items.
It is 5th component of
complete set of financial statement which provides narrative disclosures
and other information required by the standard but was not presented in
the other financial statement.
A "LINE ITEM" is a caption used to describe a group of accounts with
similar nature.
The following are the common line items together with their
composition:
ASSETS
Cash and cash equivalent
This line item consists of the following:
Cash P xx
Cash equivalent xx
Cash and cash equivalent P xx_
Cash includes cash on hand and cash in the bank.
Cash equivalents are some short-term debt securities that are acquired 3
months prior to their maturity.
Trade and other receivables
Trade Receivables - are receivable arising from the sale of goods or
services in the ordinary course of business. This includes trade accounts
receivable and trade notes receivable. Receivable arising from other sources
are nontrade receivables.
a. trade receivable is presented as current assets if they are
collectible within the normal operating cycle, even if the operating cycle is
longer than 12 months.
b. Non-trade receivable - are presented as current assets only if
they are collectible within 12 months from the end of the reporting period.
This line item consists of the following:
Account Receivable P xx
Allowance for bad debt ( xx )
Notes Receivable xx
Advances to supplier xx
Trade and other receivable P xx
only the current portion of the notes receivable is included in 'trade and
other receivable"
advances to supplier - is an account used to record an advance payment
made to suppliers for purchases of inventories that have not yet been
delivered by the supplier.
Inventory
These line items consist of goods held for sale in the ordinary course
of business.
Prepaid assets
This line items consist of the following:
Prepaid supplies P xx
Prepaid Rent xx
Prepaid insurance xx
Prepaid
Assets P xx__
The term "prepaid assets" is also referred to in traditional
accounting as "prepaid expenses".
Property, Plant and Equipment
This line items consist of the following:
Land P xx
Building xx
Accumulated depreciation-bldg (xx)
Equipment xx
Accumulated depreciation-
Equipment (xx)
Property, plant, and equipment P xx
"Property, plant, and equipment" commonly abbreviated as
PPE are also known as fixed assets.
LIABILITIES
Trade and Other Payables
Trade Payables - are payable arising from purchases of inventory
that are sold in the ordinary course of business. This includes trade account
payable and trade notes payable. Payable arising from other sources are
nontrade payables.
a. trade payable are presented as a current liability if they are
payable within the normal operating cycle, even if the operating cycle is
longer than 12 months.
b. Non-trade payable - are presented as current liability only if
they are payable within 12 months from the end of the reporting period.
This line item consists of the following :
Account Payable P xx
Notes Payable xx
Interest Payable xx
Salaries Payable xx
Utilities payable xx
Unearned income xx
Trade and other Payables P xx
Non-trade notes payable that represent bank loans are most
commonly excluded from "trade and other payables" line items and
presented separately.
Short -term borrowing
Line items consist of loans with an original term of 1 year or less.
Current portion of long-term borrowing
Line items consist of the portion of a long-term loan that is
maturing within 12 months from the end of the reporting period.
Long -term borrowing
Consists of loans with an original term of more than 1 year.
Income tax payable (Current tax payable)
Line items consist of unpaid income taxes due to the national
government.
