ACC 211 quiz: ACC-211 CH 2 Notes
Document Summary
The sections of a classified balance sheet: (lo 1) In a classified balance sheet, companies often group similar assets and liabilities together using standard classification and sections. This is useful because items within the groups have similar economic characteristics. The groupings help users determine: whether the company has enough assets to pay its debts, what claims by short-term and long-term creditors exist on the company"s total assets. A classified balance sheet contains the following standard classifications: Assert that are expected to be converted into cash or used up within the business within one year or operating cycle, whichever is longer. Examples of current assets: cash, short-term investments (which include short-term government securities), receivables (accounts receivables, notes receivables, and interest receivables), inventory, and prepaid expenses (rent, supplies, insurance, and advertising). On the balance sheet, current assets are listed in the order in which they are expected to be converted into cash (order of liquidity).
