Learning Objective 1: Identify the Sections of a classified Balance Sheet

Classified Balance Sheet

Presents a snapshot at a point in time and groups similar assets and liabilities together.

Current Assets

Assets a company expects to convert to cash or use up within one year or the operating cycle, whichever is longer.

Examples of Current Assets

Common types include cash, investments, receivables, inventories, and prepaid expense.

Operating Cycle

Average time it takes from purchase of inventory, to sale of goods, and then to collection of cash.

Components of Long-Term Investments

Investments held for more than one year, including stocks, bonds, and long-term assets such as land.

Nature of Property, Plant & Equipment

Assets with long useful lives currently used in operations that are depreciated.

Accumulated Depreciation

Total amount of depreciation expensed to date in an asset’s life.

Intangible Assets

Assets that do not have physical substance, such as goodwill, patents, and trademarks.

Current Liabilities

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

Examples of Current Liabilities

Common examples include accounts payable, salaries payable, and current maturities of long-term obligations.

Long-term Liabilities

Obligations a company expects to pay after one year, such as bond payable and mortgages payable.

Components of Stockholders’ Equity

Includes common stock and retained earnings, which is income retained for use in the business.