Chapter 3: Classified Balance Sheet

Purpose of the Balance Sheet

Shows financial position at a point in time

Usefulness of the Balance Sheet

Liquidity and solvency

Limitations of the Balance Sheet

Doesn't present market value and some items are not shown

Asset Classes

Current, Investments, PPE, and Intangibles

Liability Classes

Current/Short-Term and Noncurrent/Long-Term

Equity Classes

Paid in Capital, Retained Earnings, and AOCI

Current Asset Accounts

Cash, A/R, Inventory, Prepaids (rent, insurance, etc.), Supplies, Cash Equivalents, Notes Receivable (due within a year)

Current Asset Contra Account

Allowance for Uncollectible Accounts (goes with A/R)

Investment Accounts

Land (held for speculation), Long-term Receivables, Notes Receivable (due within more than a year)

PPE Accounts

Equipment, Land (used in operations), Building (used in operations), Machinery

PPE Contra Account

Accumulated Depreciation (goes with what it specifically depreciates)

Intangible Accounts

Franchise, Copyright, Goodwill, Patent

Current/Short-Term Liability Accounts

A/P, Deferred Revenue (due within a year), Notes Payable (due within a year), Accrued Liabilities (due within a year), Income Tax Payable, Interest Payable (due within a year), Current maturities of long-term debt, Salaries Payable

Noncurrent/Long-Term Liability Accounts

Notes Payable (due within more than a year), Bonds Payable (due within more than a year), Deferred Revenue (due within more than a year)

Paid in Capital Accounts

Common Stock