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Understanding Classified Balance Sheet Categories

Learn about major asset and liability categories in a classified balance sheet presentation with examples and explanation of current and fixed assets, current and long-term liabilities.

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Understanding Classified Balance Sheet Categories

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  1. Classified Balance Sheet • Has the data grouped according to major categories • We have already been introduced to the report form of the balance sheet. It is when the information is presented in a one-above-the-other, or vertical, format.

  2. Major Categories • Assets: • Current assets- unrestricted cash, an asset that will be converted into cash within one year, or an asset that will be used up within one year • Examples: Bank, Accounts Receivable • Fixed assets- a long-term asset held for its usefulness in producing goods or services. Same as Plant and Equipment

  3. Liabilities • Current liability- a short-term debt, payment of which is expected to occur within one year • Examples: Bank Loan, Accounts Payable • Long-term liability- a liability which, in the ordinary course of business, will not be paid within one year • Example: Mortgage Payment

  4. Peoples’ Security Company Classified Balance Sheet December 31, 2011 Heading Assets < 1 year (very liquid) Assets > 1 year Debts to be paid within 1 year (short term) Debts > 1 year Net Income > Drawings

  5. Global LogisticsClassified Balance SheetDecember 31, 20-4

  6. For tomorrow: • Complete Exercise #1, 2 p. 276 (t), p.192-193 (w) • Start exercise #2 ‘Ying Lo’ p. 292 (t) p. 202-204 (w) * Check posted answers on board

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