As a humble visitor, I would like to ask for assistance in some questions about terminology. I have googled a little but only find very general glossaries or specific but irrelevant results.
I am not an accountant, I am a software engineer. My application does some cash flow analysis and project cost management/tracking. (Is there a)/(What is the) standard term for:
- change in total value of assets over a period of time (including depreciation, disposals and acquisitions)
- change in total liabilities over a period of time
- total value of assets and liabilities
- change in the total value of assets and liabilities over a period of time.
Answers, clarifications and discussion appreciated!
A. Total Assets at end of period in question less -total assets atbeginningd of period. (Total assets being value of assets less any depreciation or amortization) This yeilds a positive for an increase, a negative for a decrease.
A. Total liabilities at end minus total liabilities at the beginning (see B above)
C. The total value of assets is as above, as are libbilities, but I think you are looking for the net of the two. They are NEVER added togther, but netted out against one another to produce Equity. Assets
- liabialities - equity (you have a problem if liabiliities exceed assets)
Change in equity is what you want. Calculate equity at the end, then at the beginning and subtract. See C above.
Any basic accounting text will have good information for you. Check at the local library or talk to an accountant you know and borrow a book. It is not really that hard, even for an engineer! ;=)
Thanks for the clarifications as to calculations. My more specific need is for what to call these various things. Thanks also to the other respondents.
Equity is definately a term I will use. One thing I wanted to use was "capital gains" to describe the improvement in Asset value, checking that with google's define: trick made me have doubts. I have also been using "Liability Adjustment" to describe Liability at the start - Liability at the end giving a positive value when things go well (getting out of debt).
Say for the month of May, the company owns two assets worth $100K each and they depreciate $10K/month. Further, the company purchases a third for $50K on the 15th that depreciates $6K/month. There are 200K of liabilities against them at the start of the month and an additional $50K loan is taken on the 15th. During the month we pay $20K against the principal and $10K in interest nothing on the new loan.
So for May we have:
10 + 10 + 3 = $ 23K depreciation
100K + 100K = $200K starting asset value
90K*2 + 47K = $227K final asset value
227K - 200K = $ 20K (what do I call this? capital gain, just gains --?)
we also have:
200K liabilities at start
180K + 50K = 130K liabilities at end.
10K of interest payments.
20K of ... what do I call this?
130K - 200K = -70K --what's this? Liability Adjustment?
and: $ 0 Equity at the beginning $-3K Equity at the end $-3K Equity gains
I have to call all these things something, so figured there might be commonly accepted terminology.
No.. net change in Assets, net change in liabilities and Change to Owner's Equity. Capital Gains is when you sell an asset the have a gain on it, and it ia a TAX concept, not an accounting concept. Accountants call it Gain/Loss on Sale of Assets.
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