Question

Question 04: Should the asset or liability be disclosed separately on the face of the balance sheet?(150 words) Question 05: Are there circumstances where timing differences should not be recognized? (150 words)

please give good answers for the a ove questions

Answer 1

Answer to Q#4 (First question in the list): Yes, the asset or the liability should be disclosed separately on the face of the balance sheet. Justification: Balance sheet explains financial position of the company as at last day of the reporting period in terms of net assets held & net liabilities owed by the company. Difference between total net assets and total net liabilities is the networth of the company. Net worth of the company is also termed as stockholders' equity wherein data related to amount & class of equity capital contributed to the company, retained earnings till the last day of reporting period, reduced by treasury stock held, if any will be reported. There will be many costs and expnses on a day-do-day basis while carrying out its operations For accounting purpose, such costs and expenses shall be categorized as either capital costs or or revenue expenditure incurred during normal course of business. An expenditure shall be considered as capital cost if economic benefits from such costs are expected to flow to the firm for more than one year. Assets will be classified as current assets and non-current assets. If assets' life time is estimated to be one year or less from the last day of reporting period, they are current assets, otherwise, they are non-current assets. Similarly, if liabilities are payable within one year from the last day of reporting period, they are current liabilities, otherwise, they are long-term liabilities. From the above points, it is evidenced that the assets or libilities shall be disclosed separately on firm's balance sheet for evaluating firm's financial position as at a particular date concerned.