ACCT 410 - ACCOUNT LIST
The list of accounts below has been modified to include “classified balance sheet” categories
[in red]
.
Please also look at the uses and ratios associated with the classified balance sheet.
ASSETS
Current Assets
:
assets that are cash, will be turned in cash, or will be used up within one year.
Cash
:
coins, currency, unrestricted amounts on deposit.
Short-Term Investments/Marketable Securities:
a business will investment excess cash by buying
stocks, bonds, etc. of other companies such as IBM, Microsoft, etc.
Receivables:
are cash amounts due from other parties.
The word in front of receivable tells you why
it is owed.
Some common examples:
-
Accounts Receivable:
cash due from customers or clients in very short time period,
generally 30 to 60 days of receiving the bill.
-
Loan/Note Receivable:
cash due which is evidenced by a formal written promissory note.
The note will specify when the payment is due and the interest rate.
-
Interest Receivable:
interest due on a loan.
[Note:
the principal portion is separate from
the interest portion.
-
Dividends Receivable:
dividends due from stock investments.
These amounts are
“receivable” when the board of directors of the other company votes in favor of a dividend.
Less: Allowance for Doubtful Accounts:
portion of accounts receivable that is estimated to be
uncollectible.
Inventory:
items held for sale in the ordinary course of business.
Prepaid Expenses
:
items where the service is paid for in advance.
These items will be expensed
later during the “adjustment process.
Some common examples:
-
Prepaid Rent, Prepaid Insurance, Prepaid Salaries, Prepaid Advertising.
Property Plant, & Equipment:
the following assets last longer than one year, are tangible, and are used
in operations to generate revenue
all are depreciated [expensed] over the period that they help generate
revenues.
The exception is land.
No explanations are included for those items that are obvious based on
their title.
Land
Buildings
Furniture & Fixtures
Machinery/Equipment:
Capital Leases:
Typically a leased items is not included on the balance sheet as it is not owned.
If it
meets certain criterion, it is viewed as “an in
-
substance purchase” and included as an asset.
If does
not meet the criterion, it is considered an operating lease and excluded from the balance sheet.
Accumulated Depreciation
:
contra-asset [contra means negative balance] is opened for each
corresponding asset account.
It reflects the amount of depreciation that has been recognized for each
asset [except land].
The cost allocated to a period is recorded as depreciation expense and the asset
value is reduced using this contra-asset account.
This is recorded during the adjustment process.
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- Spring '06
- Bonner
- Accounting, Balance Sheet, Income Statement, Revenue, Generally Accepted Accounting Principles
-
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