tailieunhanh - Ebook Financial accounting (3th edition): Part 2

(BQ) Part 2 book "Financial accounting" has contents: Inventories; financial assets, liabilities and equity, accounting and taxation, cash flow statements, group accounting, foreign currency translation, accounting for price changes, financial appraisal, international analysis. | 4/13/07 2:12 PM Page 216 Chapter 11 Financial assets, liabilities and equity Contents Objectives Introduction Cash and receivables Investments Types of investment Valuation problems Accounting for gains and losses Liabilities Definition Creditors Provisions Contingent liabilities Equity Subscribed capital Share premium Revaluation reserve Legal reserve Profit and loss reserves Reserves and provisions Comparisons of debt and equity Summary References and research Exercises 217 217 220 220 221 222 223 223 223 225 227 228 228 229 230 230 230 231 234 235 236 236 After studying this chapter carefully, you should be able to: n outline the nature, recognition and measurement of financial assets (cash, receivables and investments) and financial liabilities; n tell when different types of investments should be valued in different ways, and when to record gains and losses; n explain that there are two main types of liabilities (creditors and provisions) and outline the current practices relating to their recognition and measurement; n list the components of an entity’s residual equity; n explain the differences in the meaning of accounting terms such as allowance, provision, fund and reserve; n distinguish between debt and equity securities, while understanding that securities can have features of both. 216 4/13/07 2:12 PM Page 217 Cash and receivables Introduction As explained earlier in this book, the items in a balance sheet can be summarized under the headings of three main elements: assets, liabilities and equity. Chapter 8 looked at the definition of assets and liabilities, and some ideas relating to their recognition. Chapters 9 and 10 concentrated on the recognition and measurement of a number of particular types of assets. This chapter includes coverage of the other main types of asset: