180 Accounting: Business Reporting for Decision Making
As with assets, more detailed information regarding the components of the various liability classes
shown on the balance sheet is available in the notes to the accounts. Smaller entities may provide disag-
gregated liabilities on the balance sheet, rather than aggregating the information on the balance sheet and
providing greater detail in the notes to the accounts. To appreciate the types of liabilities within liability
classes, an extract of the disaggregation of the liability classes in the 2015 balance sheet for JB Hi-Fi Ltd
is provided in figure 5.10.
JB Hi-Fi Ltd liabilities on
the balance sheet Note Disaggregation of liability class
Current liabilitiesTrade and other payables (^15) • Trade payables
• Goods and services tax payable
• Deferred income
• Other creditors and accruals
Provisions 16 • Lease provision
• Employee benefits
Other current liabilities 17 • Lease accrual
• Lease incentive
Other financial liabilities • Interest rate swaps
Current tax liabilities • Income tax payable
Non-current liabilities
Borrowings 18 • Bank loans
Provisions 19 • Lease provision
• Employee benefits
• Other provisions
Other non-current
liabilities
20 • Lease incentive
• Lease accrual
FIGU R E 5.10 Extract of JB Hi-Fi Ltd 2015 balance sheet — disaggregation of liability classes
Source: Information from JB Hi-Fi Ltd 2015, preliminary final report, pp. 81–82.
The notes to the accounts segregate the accounts payable amount on the balance sheet into trade
payables (e.g. trade creditors), GST payable, and other creditors and accruals. A creditor is an entity
or individual to whom the entity owes money. The trade payables (or accounts payable or trade credi-
tors) are those to whom money is owed for the goods and services provided. The term ‘other credi-
tors and accruals’ refers to monies owed for non-trade related goods and services, including accrued
expenses. Accrued expenses are expenses incurred but not yet paid; they will be explored in more detail
in chapter 6. The GST payable relates to GST that has been collected by the company from customers
and needs to be remitted to the government. The tax liability that JB Hi-Fi Ltd has in relation to income
tax is disclosed in a separate class called current tax liabilities.
JB Hi-Fi Ltd’s borrowings include bank loans. Figure 5.10 does not reflect the further segregation of
borrowings into secured and unsecured, although this is provided in the relevant note. The provider of
secured debt has a priority claim over the entity’s assets in the event of the entity’s demise. The pro-
vider of unsecured debt has no priority claim over the entity’s assets; if the entity goes into receivership,
the provider will recover its money, or part thereof, only if the proceeds from asset sales exceed the
monies owed to secured debt holders. Shareholders are entitled to cash only if any funds remain after all
the liabilities have been satisfied. Entities often disclose the assets offered as security for the borrowings
and the interest rate range of the borrowings. While JB Hi-Fi Ltd has no other types of borrowings,
debentures and notes are a type of borrowing often found on balance sheets.