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ACC220_WK3_CkPt_Class_Bal_Shts - buildings machinery office...

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Classified Balance Sheets 1 A classified balance sheet arranges the balance sheet accounts into a simpler format making it much easier to read. Most balance sheets use the following five categories that represent assets: 1. Current: Current assets are cash and non-cash assets that are expected to be converted into cash, sold, or consumed within one year or the operating cycle of the business, whichever is longer. Current liabilities are obligations that will be eliminated within one year, or the operating cycle of the business. 2. Long Term Investments: Long Term investments and funds are investments a company intends to hold for more than one year. They can consist of stocks and bonds of other companies, real estate, and cash that has been set aside for a specific purpose or project. Additionally, long term investments may include stock in a company’s affiliates and subsidiaries. 3. Property, Plant and Equipment: Property, plant and equipment is the long term or noncurrent asset section of the balance sheet. Included in this classification are land,
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Unformatted text preview: buildings, machinery, office equipment, vehicles, furniture and fixtures used in a business. Also included in property, plant and equipment is the accumulated depreciation for these assets (except for land, which is not depreciated). 4. Intangible Assets: Intangible assets are something of value that cannot be physically touched, such as a trademark, patent, brand, etc. 5. Other: Miscellaneous assets and liabilities that do not fit in any of the other categories. The classified balance sheet is extremely important in making financial decisions. Perhaps a company is asked to make a loan or lease property to another company. Their classified balance sheet is their roadmap for success and informs management of the company’s financial ability to make the loan, lease the property, purchase equipment, or alerts them to their inability to enter into such a transaction. ACC220...
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