What is fraudulent financial reporting? Provide an example of fraudulent financial reporting - 12852

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  1. What is a current liability? What is a noncurrent liability? What is the difference between the two types of liabilities? In which financial statement would you find these liabilities? (250 word)

 

Current liabilities are the amounts that the company owes to others. The company is liable to pay for them. These are the amounts that are falling due within one year. Examples of current liabilities are trade payables, short term loans, interest payables, bonds payables, accrued salaries and benefits, deposits by customers and reserves that relate to federal taxes. Accounts payables are accounts that are created when a company buys goods or services on credit, i.e. the company does not pay for them immediately. The credit terms will allow the company to delay the payment for  specific number of days. Trade payables will constitute a major part of the current liabilities because the company is constantly conducting business by purchasing raw materials or products to be sold later on. Accrued salaries and benefits include amounts owed to the staff for salaries, or bonuses. These are amounts that the staff has earned but have not yet been paid. Short term and current long term debts include postions of amounts on loans that are falling due within one year. (http://beginnersinvest.about.com/od/analyzingabalancesheet/a/current-liabilities.htm)

Non-current liabilities are the amounts that are falling due after more than one year. Long term debt is an example of an amount that falls under non-current liability. It is an amount that needs to be paid back after many years. The debt is raised by issuing bonds. Having large amounts of long term liabilities can be risky for the company. This is because whether the company makes any profit or not, it has to repay the amount and also regular interest payments. (http://news.morningstar.com/classroom2/course.asp?docId=145091&page=6&CN=com)

 

  1. What are the types of equity accounts? What is the role of equity accounts in raising capital? Under what circumstances would you not pay a dividend? Under what circumstances would you pay a dividend? Who are the users of financial statements? How would users differ in their views of the financial statements? Why would users rely on financial statements? What is an example of a financial measure that an external user might use? What is an example of a financial measure that an internal user might use? (250 word)

 

 

  1. What is fraudulent financial reporting? Provide an example of fraudulent financial reporting. (250 word)

 

 

Solution Description
  1. What is a current liability? What is a noncurrent liability? What is the difference between the two types of liabilities? In which financial statement would you find these liabilities? (250 word)

 

Current liabilities are the amounts that the company owes to others. The company is liable to pay for them. These are the amounts that are falling due within one year. Examples of current liabilities are trade payables, short term loans, interest payables, bonds payables, accrued salaries and benefits, deposits by customers and reserves that relate to federal taxes. Accounts payables are accounts that are created when a company buys goods or services on credit, i.e. the company does not pay for them immediately. The credit terms will allow the company to delay the payment for  specific number of days. Trade payables will constitute a major part of the current liabilities because the company is constantly conducting business by purchasing raw materials or products to be sold later on. Accrued salaries and benefits include amounts owed to the staff for salaries, or bonuses. These are amounts that the staff has earned but have not yet been paid. Short term and c