What Is an Air Waybill (AWB)?

An air waybill (AWB) is a document that accompanies goods shipped by an international air courier to provide detailed information about the shipment and allow it to be tracked. The bill has multiple copies so that each party involved in the shipment can document it. An air waybill (AWB), also known as an air consignment note, is a type of bill of lading. However, an AWB serves a similar function to ocean bills of lading, but an AWB is issued in non-negotiable form, meaning there’s less protection with an AWB versus bills of lading.

Understanding an Air Waybill (AWB)

An air waybill (AWB) serves as a receipt of goods by an airline (the carrier), as well as a contract of carriage between the shipper and the carrier. It’s a legal agreement that’s enforceable by law. The AWB becomes an enforceable contract when the shipper (or shipper’s agent) and carrier (or carrier’s agent) both sign the document. 

The airway bill will also contain the shipper’s name and address, consignee’s name and address, three-letter origin airport code, three letter destination airport code, declared shipment value for customs, number of pieces, gross weight, a description of the goods, and any special instructions (e.g., “perishable”).

An AWB also contains the conditions of the contract that describe the carrier’s terms and conditions, such as its liability limits and claims procedures, a description of the goods, and applicable charges.

Air Waybill (AWB) vs. Bill of Landing

AWBs are unlike other bills of lading, in that they are non-negotiable instruments, meaning that it does not specify on which flight the shipment will be sent, or when it will reach its destination. Bills of lading are legal documents between the shipper of goods and the carrier, detailing the type, quantity, and destination of the goods being carried.

Bills of lading also act as a receipt of shipment when the goods are delivered at a predetermined destination. This document accompanies the goods and is signed by authorized representatives of the shipper, the carrier, and the recipient. However, unlike a bill of landing, an air waybill (AWB) is non-negotiable. Being non-negotiable, the AWB is a contract just for transportation and does not cover the merchandise value.

Requirements for an Air Waybill

The International Air Transport Association (IATA) designs and distributes air waybills. There are two types of AWBs—an airline-specific one and a neutral one. Each airline AWB must include the carrier’s name, head office address, logo, and air waybill number. Neutral air waybills have the same layout and format as airline AWBs; they just aren’t prepopulated.

An air waybill has 11 numbers and came with eight copies of varying colors. With the Multilateral Electronic Air Waybill Resolution 672, paper air waybills are no longer required. Dubbed the e-AWB, it’s been in use since 2010 and became the default contract for all air cargo shipments on enabled trade lines as of 2019.

What Is an Available-for-Sale Security?

An available-for-sale security (AFS) is a debt or equity security purchased with the intent of selling before it reaches maturity or holding it for a long period should it not have a maturity date. Accounting standards necessitate that companies classify any investments in debt or equity securities when they are purchased as held-to-maturity, held-for-trading, or available-for-sale. Available-for-sale securities are reported at fair value; changes in value between accounting periods are included in accumulated other comprehensive income in the equity section of the balance sheet.

How an Available-for-Sale Security Works

Available-for-sale (AFS) is an accounting term used to describe and classify financial assets. It is a debt or equity security not classified as a held-for-trading or held-to-maturity security—the two other kinds of financial assets. AFS securities are nonstrategic and can usually have a ready market price available.

The gains and losses derived from an AFS security are not reflected in net income (unlike those from trading investments), but show up in the other comprehensive income (OCI) classification until they are sold. Net income is reported on the income statement. Therefore, unrealized gains and losses on AFS securities are not reflected on the income statement.

Net income is accumulated over multiple accounting periods into retained earnings on the balance sheet. In contrast, OCI, which includes unrealized gains and losses from AFS securities, is rolled into “accumulated other comprehensive income” on the balance sheet at the end of the accounting period. Accumulated other comprehensive income is reported just below retained earnings in the equity section of the balance sheet.

Available-for-Sale vs. Held-for-Trading vs. Held-to-Maturity Securities

As mentioned above, there are three classifications of securities—available-for-sale, held-for-trading, and held-to-maturity securities. Held-for-trading securities are purchased and held primarily for sale in the short term. The purpose is to make a profit from the quick trade rather than the long-term investment. On the other end of the spectrum are held-to-maturity securities. These are debt instruments or equities that a firm plans on holding until its maturity date. An example would be a certificate of deposit (CD) with a set maturity date. Available for sale, or AFS, is the catch-all category that falls in the middle. It is inclusive of securities, both debt and equity, that the company plans on holding for a while but could also be sold.

From an accounting perspective, each of these categories is treated differently and affects whether gains or losses appear on the balance sheet or income statement. The accounting for AFS securities is similar to the accounting for trading securities. Due to the short-term nature of the investments, they are recorded at fair value. However, for trading securities, the unrealized gains or losses to the fair market value are recorded in operating income and appear on the income statement. 

Changes in the value of available-for-sale securities are recorded as an unrealized gain or loss in other comprehensive income (OCI). Some companies include OCI information below the income statement, while others provide a separate schedule detailing what is included in total comprehensive income.

Recording an Available-for-Sale Security 

If a company purchases available-for-sale securities with cash for $100,000, it records a credit to cash and a debit to available-for-sale securities for $100,000. If the value of the securities declines to $50,000 by the next reporting period, the investment must be “written down” to reflect the change in the fair market value of the security. This decrease in value is recorded as a credit of $50,000 to the available-for-sale security and a debit to other comprehensive income.

Likewise, if the investment goes up in value the next month, it is recorded as an increase in other comprehensive income. The security does not need to be sold for the change in value to be recognized in OCI. It is for this reason these gains and losses are considered “unrealized” until the securities are sold.

What Are Articles of Association?

Articles of association form a document that specifies the regulations for a company’s operations and defines the company’s purpose. The document lays out how tasks are to be accomplished within the organization, including the process for appointing directors and the handling of financial records.

Understanding Articles of Association

Articles of association often identify the manner in which a company will issue shares, pay dividends, audit financial records, and provide voting rights. This set of rules can be considered a user’s manual for the company because it outlines the methodology for accomplishing the day-to-day tasks that must be completed.

While the content of the articles of association and the exact terms used vary from jurisdiction to jurisdiction, the document is quite similar throughout the world and generally contains provisions on the company name, the company’s purpose, the share capital, the company’s organization, and provisions regarding shareholder meetings.

In the the U.S. and Canada, articles of association are often referred to as “articles” for short.

Company Name

As a legal entity, the company must have a name that can be found in the articles of association. All jurisdictions will have rules concerning company names. Usually, a suffix such as “Inc.” or “Ltd.” must be used to show that the entity is a company. Also, some words that could confuse the public, such as “government” or “church,” cannot be used or must be used only for specific types of entities. Words that are offensive or heinous are also usually prohibited.

Purpose of the Company

The reason for the creation of the company must also be stated in the articles of association. Some jurisdictions accept very broad purposes—”management”—while others require greater detail—”the operation of a wholesale bakery,” for example.

Share Capital

The number and type of shares that comprise a company’s capital are listed in the articles of association. There will always be at least one form of common share that makes up a company’s capital. In addition, there may be several types of preferred shares. The company may or may not issue the shares, but if they are found in the articles of association, they can be issued if and when the need presents itself.

Organization of the Company

The legal organization of the company, including its address, the number of directors and officers, and the identity of the founders and original shareholders, are found in this section. Depending on the jurisdiction and type of business, the auditors and legal advisors of the company may also be in this section.

Shareholder Meetings

The provisions for the first general meeting of shareholders and the rules that will govern subsequent annual shareholder meetings—such as notices, resolutions, and votes—are laid out in detail in this section.

Small Business Example of Articles of Association

A person, or group of people, starting a business will typically refer to a lawyer, accountant, or both for advice when setting up a company.

The company will choose a name and define its purpose. The company is then registered at the state/province or federal level. Note that trademarking a name is a different process.

A company may issue shares to divide up the company if it wishes, but it doesn’t need to. The articles will lay out how this can be done. The lawyer or accountant will typically work with the directors of the company, asking them questions to help figure out how they wish to grow and how the company may end up being structured in the future.

Company directors are listed, along with their personal information. A business address is also provided.

Changes can be made to the articles of association with director(s) approval.