Accounting Chapter 4 Notes

Two most widely used decisions aids in the business

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Unformatted text preview: heet lists liabilities in the order in which they must be paid. Balance sheets report two liability categories: Current liabilities and long- term liabilities Current Liabilities - Current liabilities must be paid either with cash or with goods and services within one year, or within the entity’s operating cycle if the cycle is longer than a year. Long- Term Liabilities - All liabilities that do not need to be paid within the entity’s operating cycle are classified as long- term liabilities. EX: When you buy a car, you often sign up for several years of car payments, making it a long- term liability. The Classified Balance Sheet - Classified Balance sheet: The balance sheet actually used in practice. Balance Sheet Forms - Classification means dividing assets and liabilities between those that will last less than a year (current) and those that will l...
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