Chapter 2: Identify the sections of a classified Balance Sheet

What is the balance sheet classification for: Mortgage payable (due in 3 years) Notes payable (long-term) *Bonds Payable

Long-term Liabilities

A classified balance sheet determines

1) whether company has enough assets to pay its debts as they come due 2) claims of short and long term creditors on the companies total assets

What is the balance sheet classification for: Cash Debt investments (savings account) Accounts Receivable Inventory Supplies Prepaid Insurance/Rent -- typically last

Current Assets

The 4 Standard Classifications of Assets

Current Assets Long-term Investments Property, Plant and equipment Intangible assets

What is the balance sheet classification for: Notes PAYABLE (current) - signed legal doc; carries interest Accounts PAYABLE --rest in order of magnitude $$-- UNEARNED sales revenue Salaries and wages PAYABLE Interest PAYABLE Income Taxes PAYABLE

Current Liabilities

The Standard Classifications for Liabilities and Stockholders' equity

Current liabilities Long-term liabilities Stockholders' equity

What is the balance sheet classification for: Patent Goodwill Trademark Copyrights

Intangible Assets

Long-term Investments

Investments in stocks and bonds of other companies that are held for more than 1 year assets like land or buildings not currently being used (would be said)

What is the balance sheet classification for: Stock investments Investment in real estate Investment in long-term bonds Debt investments (long-term) Land or Buildings (not currently being used)

Long-term Investments

Depreciation

a process used to allocated the cost of PPE assets to a number of years the order PPE is listed from largest (price) to smallest decline in value

Intangible Assets

assets that do not have a physical substance yet but are often valuable - can't touch, but have value

Current Assets

assets that is expected to be converted to cash or used up within 1 year listed in the order which they are expected to be converted to cash IN ORDER OF LIQUIDITY

Property, Plant, and Equipment

assets with long useful lives that are currently used AKA: Fixed Assets, Plant Assets, or PPE In order of largest $$ first

retained earnings

earnings retained in the business that are NOT paid out in dividends

Longterm investments

investments in stocks and bonds of other companies that are held for more than 1 year

Long-term Liabilities

obligations that a company expects to pay after 1 year

long-term liabilities

obligations that a company expects to pay after 1 year

Current Liabilities

obligations that the company is to pay within the coming year

common stock

ownership money invested by stockholders

Liquidity

the ease with which an asset can be converted into cash and the order current assets are listed

Accumulated Depreciation

the total of depreciation that a company has taken so far on it's assets shown at cost less

Current Liabilities

Obligations that a company expects to pay within the next year or operating cycle, whichever is longer.

What is the balance sheet classification for: Land Buildings Equipment Accumulated Depreciation *Delivery vehicles *Furniture

Property, Plant, and Equipment

What is the balance sheet classification for: Common Stock Retained Earnings

Stockholders' Equity

Operating cycle

The average time that it takes from the purchase of inventory to the collection of cash from customers. Usually 1 year

A classified balance sheet reports

assets, liabilities and equity at a point in time the balances at a point in time