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Chapter 4

Classified Balance Sheet – Presents the assets and liabilities of a business in separate subgroups

Typical Components of a Classified Balance Sheet

Assets | Liabilities and Stockholders Equity |

Current Assets * Cash and cash equivalents * Accounts receivable * Inventory * Other current assets | Current Liabilities * Accounts payable * Accrued expenses payable * Short term notes payable * Other current liabilities |

Long Term Assets * Property, plant and equipment * Intangible assets * Other long term assets | Long Term Liabilities * Long term notes payable * Other long term liabilities |

| Stockholders’ Equity |

Current Assets – Consist of cash and other assets that will be converted into cash or used up within the normal operating cycle of a business or one year, whichever is longer

Normal Operating Cycle – The average period of time between the use of cash to deliver a service or to buy goods for resale and the subsequent collection of cash from customers who purchase those services or products

Current assets are listed on a classified balance sheet in the order of their expected liquidity.

Liquidity – Determined by the ability of an asset to be readily converted into cash

Property, plant, and equipment – Consists of the land, buildings, equipment, vehicles, furniture, and fixtures that a company uses in its day-to-day operations.

Intangible assets – Brand names, copyrights, patents, and trademarks that a company acquires; These assets are intangible because, unlike buildings and equipment, they lack a physical presence, but they still enable a company to generate revenue from its customers who recognize the quality associated with products bearing a brand name or trademark

Current Liabilities – Liabilities that must be settled within the normal operating cycle or one year, whichever is longer

Accrued expenses – wages, utilities, interest, income tax, property taxes owed

Long term liabilities – Debt...