Activos y Pasivos Corrientes en PCGA

• The distinction between current and non-current assets and liabilities is an important component of financial reporting.
• This distinction is useful for liquidity analysis, which interests various stakeholders.
• Several Accounting Principles (PCGA) relate to current assets and liabilities like ARB-43, Chapter 1A and Chapter 3A, FAS-6, FAS-43, FAS-78, FIN-8, FTB 79-3, and FTB 85-4.

Continuous Capital Circulation

• In normal business operations, there's a continuous circulation of capital within current assets.
• For example, a manufacturer uses cash for materials, labor, and manufacturing costs, turning them into finished goods inventory.
• Once sold, the inventory usually becomes an account receivable.
• Upon payment, the receivable turns into cash, thus completing a cycle.
• The time to disburse and recover payment is known as the operating cycle used to categorize current assets.

Timing Considerations

• Generally, one year is used as the basis to separate current assets if the operating cycle is shorter.
• Longer operating cycles (e.g., lumber, tobacco, distilleries) utilize the extended timeframe.
• Businesses without a clear operating cycle should adhere to the one-year rule.
• Companies often use the natural business year, where activities, inventory, and receivables are at their lowest.
• This date is frequently selected as the fiscal year-end for financial reporting.

Current Assets

• Current assets include resources reasonably expected to be realized in cash, sold, or consumed within the normal operating cycle.
• Current assets are sometimes called circulating or working assets.
• Cash restricted for non-current operations should not be classified as current.
• Common categories of current assets are cash, other liquid resources, accounts receivable, and inventories.
• "Cash" includes money in any form, whether deposited or available for use.
• Highly liquid resources include negotiable securities.
• "Accounts Receivable" encompasses amounts due from customers, employees, and officials, all of which are due within the current operating cycle.
• "Inventories" comprises all types of inventories, such as merchandise, raw materials, work-in-progress, finished goods, and maintenance supplies.
• "Prepaid Expenses" covers insurance, rent, taxes, advertising, and supplies; these don't convert to cash but prevent the use of current assets in the next cycle.

Current Liabilities

• Current liabilities are obligations reasonably expected to require the use of current assets or the creation of other current liabilities for liquidation.
• Common types are obligations for operations, maturities, advanced collections, and other accruals.
• "Obligations for Operations" arise from acquiring resources for the company’s operating cycle, including accounts payable to suppliers and accrued obligations.
• "Maturities" are debts expected to be settled during the current operating cycle like short-term notes payable and the currently maturing portion of long-term debt.
• "Advanced Collections" include payments for services to be rendered later, such as subscriptions.
• "Other accruals" include estimated obligations due within a year, only when the amount can be reasonably estimated.

Working Capital

• Working capital is the excess of current assets over current liabilities. It indicates the relative liquidity of the company.

Analyzing Changes in Working Capital

• Changes in working capital result from increases and decreases in current assets and liabilities compared to the previous year.
• The current ratio (current assets divided by current liabilities) is an indicator of the current situation and useful for short-term credit analysis.
• The acid-test ratio is calculated by dividing highly liquid assets by total current liabilities.
• High-liquidity assets consist of cash, receivables, and marketable securities.
• Only receivables and securities convertible to cash are included and restricted cash is excluded.

Asset and Liability Offsetting

• Offsetting refers to presenting a net balance in financial statements, representing the excess of assets over liabilities or vice versa.
• If the amounts are equal, the balance is zero and not shown.
• If the balance isn't zero, it's classified by the nature of the larger item.
• APB Opinion 10 addresses the general principle of offsetting taxes; it is unacceptable except with explicit legal right.
• This includes netting cash or other assets against taxes payable or other debts to the government if these assets aren't specifically designated for such payment.
• One exception is when buying government-accepted securities to pay upcoming tax liabilities, essentially an advanced tax payment.
• The possibility of offsetting assets and liabilities considers conditions that could obligate payment to another entity.
• FIN-39 expands the principle to cover conditional amounts where what is received or paid depends on interest rates, currency, or certain product prices.
• FIN–39 lists four criteria to allow such offsetting like each party owes the other a definite amount, the reporting party has a right to offset per a contract, the reporting party intends to offset, and the right has legal backing.
• Disclosure issues arise when netting items classified as currents as it limits information.

Principles of accounting

• Accepted principles prescribe accounting treatments involving compensation or revealing compensated balances in financial statements.
• FIN-39 doesn't change these cases, regarded as unique scenarios and sources include FASB and APB declarations.

Accounts Receivable Presentation

• Receivables are reported at net realizable value and equal to the gross claim minus doubtful collection allowance.
• FAS-5 states a contingency exists if a company doesn’t expect full payment; a loss is recorded if both conditions are met: it is probable the company won't collect all due and the loss can be reasonably estimated.
• Even if specific debtors aren't identified, loss can be recorded and estimated based on historical data, industry standards, and economic evaluations.
• Methods to account doubtful accounts are the direct write-off method and allowance method but the former violates PCGA.
• Direct write-off shows bad debt expense only when an account is deemed uncollectible and fails to match the related revenue.
• The accounts receivable are overstated because it does not seperate doubtful accounts included in the accounts receivable balance.
• For the allowance method, a percentage of sales or outstanding balance is estimated as uncollectible, charged to bad debt expense, and credited to an allowance account.
• Specific write-offs are debited against the allowance account, which is periodically recalculated.
• Doubtful accounts could be approximated relative to sales volume or current accounts.
• Financial statements exclude finance charges for receivables to show accurate value.

Factoring receivables

• Discounted Notes Receivable where the endorser transfers the note to a third party for cash, the difference between proceeds the the notes and value at maturity is known as discount.
• With Resource, the transferor remains liable at maturity or no recourse.
• "Discounted Notes Receivable" nets against the accounts due and the accounting below: determine maturity value including cumulated charges, quantify the discount, product is the maturity amount.

Factoring receivables

• Factoring can generate immediate funds whether with or without recourse where the buyer can revert for reimbursement when unable to procure revenue.
• With resource means the buyer passes accountability to retrieve any shortfalls from revenue or transferor assumes associated hazards, notifying debtors.

Accounts receivable due on loans

• Companies collateralize outstanding accounts for loan, still owns yet needs proceed for payment.

Insurance policies on life

• Life insurance benefits for employees give financial security to their beneficiaries, insurers remit benefits subtracting prior debt upon their passing.
• A stipulation is to have "insurable interest" for legitimacy where the insured person is of interest to the policy holder, the stipulation exists when issued but property needs it throughout tenure.

General accounting consideration

• Accounting guidance is in FTB 85-4 and fair value equals disposable worth, where an increasing asset nets policy's increasing worth in book, premiums exceeding accru are coverage charge.

Accounting for corporate accounts

• The provision dictates policy to enterprises owning for profit and beneficiaries with split rights where property allows drawing and changes, a beneficiary only receives payout.

FAS-6 and Interpretation No. 8

• FAS-6 and Interpretation No. 8 of FASB establish PCGA to reclassify obligations on refinanced debts.
• These are classified when intent for repayment or security emission happens for categorized balances only.
• Removal from liability line happens on planned financing with sufficient payment capability shown with: debt or equal stock, occurring after closing, before release, and applying assets.
• Another allowance is a debt agreement enabling repayment and the guidelines dictate transparent items where participants cannot annul, spanning more life beyond turnover, and has no faults.
• A creditor's financial stability is considered and short-term payments for renewal cannot exceed new revenues while maintaining conventional conservative approximates, full liability reveals failure to conform.
• Sourcing other monies is acceptable and failing loan acceptance causes use of debt agreements.

FIN-8

• FIN-8's short-term responsibilities that are replaced using liability or equities reveal requirements that payment requires real funds.
• Sustainable arrangements follow instructions enabling categorization where reports show figures, with a complete agreement plus previous equities.

Classification on liability

• FAS-78 dictates how to class creditor demands in balances.
• This standard uses a balance for whether responsibility needs the near or long-term categorization when the debts' expiration date necessitates report disclosures.
• Disclosures cover expirations not featured or items set aside differently.
• Accounting standards allow a lender capacity so near payment dates dictate the company must recognize as now due, although exception happens when the creditor postpones the payment right lasting extended cycles.
• Expiration causes a violation of debt payment, FAS-78 dictates as current unless no action happens with cycles the lender allows as long duration, or the fault discontinues when the creditor offers leeway.
• Debt that extends may necessitate an grace period with faults plus FAS-78 categorizes obligations when: debts are waved enabling elongated payment, fault resolves, or period is extended.

FAS-78 Amendments

• FAS-78's amendment relies greatly on terms.
• Lender's forgiveness lets one categorize cycles where non-current obligations.

Payment acceleration clauses

• Clause FAS-6, or Chapter 3A exclude liabilities having payment.
• Accelerating clause allows the operator to extract portion by unilateral action, the accord would stipulate when repeated damage occurs then discretion would influence.
• FTB 79-3 guides payment recognition with the clause where probable then classify amounts at close terms; disclosures would exist if creditor has discretion within possibilities then full disclosures help for potential legal implications. FAS-5, relating contingencies, formed probably metrics that FTB 79 3 utilizes.
• One class for long-term causes conditions an amount requires to stabilize and subjective circumstances immediately convert on preference although payment occurs after time.

Benefit on workers left employed

• FAS-43 standard regards benefits given workers instead of dismissal.
• It mainly accrues over intermittent times instead regarding dismissal, options to purchase equities, compensation later, retirement advantages, group or illness payments.
• Benefits count when the company enables the funds where they require service contribution, establishment, and there are possible easy estimates.
• Meeting three requirements causes disclosures while rights are given irrevocably from work contribution where no future output comes in return or the staff withdraw.

Benefits

• Rights are amassed with increasing years then FAS-43 allows estimates on amassed worth while organizations need calculate amount that would be lost and rights aren't needed when sickness exists with reliable outputs.

Balance standards

• Balances should clearly label the elements and bases, after display data plus elements like: metrics for valuable materials, categories regarding stocks inventory, restrictions on running material, and the accounting guidelines utilized. Data for workers owed appear uniquely within balance.