3311Ch03 - Sommers ACCT3311 SMUCox CHAPTER3...

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Sommers–ACCT 3311 SMU Cox 1 CHAPTER 3 THE BALANCE SHEET AND FINANCIAL DISCLOSURES The Balance Sheet Reports a company’s financial position on a particular date. Limitations Limitations: The balance sheet does not directly measure the market value of the entity nor its liquidation value, but it provides valuable information that can be used to help judge market value. Resources such as employee skills and reputation are not recorded in the balance sheet. Usefulness: The balance sheet describes many of the resources a company has for generating future cash flows future cash flows. It provides liquidity information useful in assessing a company’s ability to pay its current obligations. It provides long term solvency information relating to the riskiness of a company with regard to the amount of liabilities in its capital structure
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Sommers–ACCT 3311 SMU Cox 2 A Representative Classification of Balance Sheet Assets Current assets Liabilities Current liabilities Long term investments Property, plant, and equipment Intangible assets Other assets Long term liabilities Other liabilities Stockholders’ equity Contributed capital Ci t l tk Capital stocks Additional paid in capital Retained earnings Accumulated other comprehensive income (In thousands) 2006 2007 Assets: Current assets: Cash and cash equivalents 3,544,671 $ 6,081,593 $ Google Inc. Balance Sheet December 31 Marketable securities 7,699,243 8,137,020 Accounts receivables, net of allowance 1,322,340 2,162,521 Deferred income taxes, net 29,713 68,538 Income taxes receivable - 145,253 Prepaid revenue share, expenses and other assets 443,880 694,213 Total current assets 13,039,847 17,289,138 Noncurrent assets: Prepaid revenue share, expenses and other assets noncurrent 114 455 168 530 other assets, noncurrent 114,455 168,530 Deferred income taxes, net., non-current - 33,219 Non-marketable equity securities 1,031,850 1,059,694 Property and equipment, net 2,395,239 4,039,261 Intangible assets, net 346,841 446,596 Goodwill 1,545,119 2,299,368 Total noncurrent assets 5,433,504 8,046,668 Total Assets 18,473,351 $ 25,335,806 $
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Sommers–ACCT 3311 SMU Cox 3 Assets Assets are: Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Presented in order of liquidity Note: Due to the wide variety of account titles, a careful review of notes to the financial statements often is important for a proper understanding of the items reported by a company. Current Assets Assets that will be converted to cash or consumed within one year or the operating cycle consumed within one year or the operating cycle, whichever is longer. Cash equivalents include certain negotiable items such as commercial paper, money market funds, and U.S. treasury bills.
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3311Ch03 - Sommers ACCT3311 SMUCox CHAPTER3...

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