ACCT 1209 Lecture Notes - Lecture 12: Gross Margin, Operating Expense, Income Statement
11 Feb 2016
School
Department
Course
Professor
Document Summary
Classified balance sheet and multiple- step income statement. To facilitate proper analysis, accountants will often divide the balance sheet into categories or classifications. The result is that important groups of accounts can be identified and subtotaled. Such balance sheets are called classified balance sheets. A classified balance sheet presents information about an entity"s assets, liabilities, and shareholders" equity that is aggregated into subcategories of accounts. It is extremely useful to use classifications, since information is then organized into a format that is more readable than a simple listing of all the accounts that comprise a balance sheet. When information is aggregated in this manner, a balance sheet user may find that useful information can be extracted more readily than would be the case if an overwhelming number of line items were presented. The most common classifications used within a classified balance sheet are: i. ii. iii. iv. v. vi. The sum of these classifications must match this formula:
