2.1 The Classified Balance Sheet

current assets

assets that a company expects to convert to cash or use up within one year or its operating cycle(whichever is longer) ex: cash, investments, receivables (accounts, notes, interest), inventory, prepaid expenses (insurance and supplies) list theses in the order in which they expect them to be converted into cash.

Property, plant, and equipment

assets with relatively long useful lives that are currently used in operating the business. Ex: land buildings, equipment, delivery vehicles, and furniture.

stockholder's equity

common stock and retained earnings

intangible assets

company assets that do not have physical substance and yet often are very valuable. ex: patents, copyrights, and trademarks or trade names that give the company exclusive right of use for a period of time.

Assets

current assets, Long-term investments, property, plant, and equipment, Intangible assets

liabilities and stockholder's equity

current liabilities, long term liabilities, stockholders equity

classified balance sheet

groups together similar assets and similar liabilities, using a number of standard classifications and sections.

longterm investments

investments in stocks and bonds of other corporations that are held for more than one year, long term assets such as land or buildings that a company is not currently using in in its operating activities, long-term notes receivable.

longterm liabilities

obligations that a company expects to pay after one year or business cycle. ex: bonds payable, mortgages payable, long term notes, lease liabilities, and pension liabilities

Liabilities

obligations that the company is to pay within the next year or operating cycle.

accumulated depreciation account

show the total amount of depreciation that the company has expensed thus far in the asset's life.

depreciation

the allocation of the cost of an asset to a number of years. Or assigning a portion of an asset's cost as an expense each year rather than expensing the full purchase price in the year of purchase.

operating cycle

the average time required to purchase inventory, sell it on account, and then collect cash from customers.

retained earning

the income retained for the use in the business

common stock

the investments of assets into the business by the stockholders.