⋆.𐙚 ̊ accounting [chapter two]: sections of a classified balance sheet

classified balance sheet

a balance sheet that groups things into sections like current assets, long-term assets, liabilities, and equity

classified balance sheet vs unclassified balance sheet

classified: sorted into categories

unclassified: just a list

current assets

things the company owns that will turn into cash, sell, or use up within one year

operating cycle

the time it takes to

1.) buy things you need

2.) sell/use them

3.) collect money from customers

common types of current assets

cash, accounts receivable, inventory, supplies, prepaid expenses

“current” definition

means “within a year”, not “right now”

long term investments

things the company will keep for more than one year (ex: stocks, bonds, land)

long term assets

anything valuable the company keeps for many years (buildings, equipment)

long term notes receivable

money other owe you, but will pay you back after more than a year

property, plant, and equipment

big, long lasting things the company uses to run the business, like land, buildings, and machines

accumulated depreciation

the total value lost over time for those big things (ex: a car)

current liabilities

debts the company must pay within a year

common examples of current liabilities

1.) accounts payable

2.) salaries/wages payable

3.) unearned service revenue

4.) taxes payable

current maturities of long term obligations

the part of a large loan that must be paid this year

long term liabilities

debts the company must pay back after more than one year

common long term liabilities

1.) long term loans

2.) bonds payable

3.) pension obligations