2.1 : Identify the Sections of a Classified Balance Sheet

What is the order that current assets are listed in?

In order of liquidity

Noncurrent assets. Assets that have no physical substance. MUST BE INCLUDED ON CLASSIFIED BALANCE SHEET.

Intangible assets

What is an example of property, plant, and equipment?

Land, buildings, machinery, equipment, furniture

Assets that can be converted into cash, but not expected to be converted to cash within one year. MUST BE INCLUDED ON CLASSIFIED BALANCE SHEET.

Long term investments

Obligations expected to be paid after one year. MUST BE INCLUDED ON CLASSIFIED BALANCE SHEET.

Long term liabilities

Total amount of depreciation that has been expended since the asset was placed in service.

Accumulated depreciation

What is an example of long term liabilities?

Bonds payable, mortgages payable, lease liabilities

What are examples of current assets?

Cash, short term investments, receivables, inventories, prepaid expenses

What is an example of intangible assets?

Goodwill, patents, copyrights, trademarks, trade names

A balance sheet that groups together similar assets and similar liabilities, using a number of standard classifications and sections.

Classified balance sheet

Assets that are expected to be converted to cash or used up in the business within ONE YEAR OR ONE OPERATING CYCLE, which ever is longer. MUST BE INCLUDED ON CLASSIFIED BALANCE SHEET.

Current assets

Obligations that are to be paid within the coming year or operating cycle whichever is longer. MUST BE INCLUDED ON CLASSIFIED BALANCE SHEET.

Current liabilities

Practice of allocating the cost of assets to a number of years.

Depreciation

The amount of the allocation for one accounting period.

Depreciation expense

What is an examples of current liabilities in order?

Notes payable, accounts payable, wages payable

The average time required to go from cash to cash in producing revenue. Buying inventory, selling it, and collecting the cash from the customers.

Operating cycle

Assets with relatively long useful lives that are currently used in operating the business. Also known as, fixed assets or plant assets. MUST BE INCLUDED ON CLASSIFIED BALANCE SHEET.

Property, plant, and equipment

What are other necessities on a classified balance sheet.

Stockholders' equity, Retained earnings statement, Statement of stockholders' equity

What does a classified balance sheet assist with?

Whether the company has enough assets to pay debts, what claims by short and long term creditors exist on company's total assets