ACCT 2001 Chapter : Chapter 2 Notes Accounting 2001
Document Summary
The classified balance sheet reports the assets, liabilities, and equity at a specific point in time (ending date in r/e) Groups together similar assets and similar liabilities, using standard classifications. This is the order that ought to be listed on any balance sheet problem. For current liabilities account notes payable and then accounts payable. Then, from largest to smallest, account the rest of the current liabilities. Sell customer on credit/ on account (a/r account receivable) Current assets assets that a company expects to convert to cash or use up within one year or the operating cycle, whichever is longer; examples include, cash, short-term investments, accounts receivable, inventory, prepaid insurance, and supplies. Operating cycle is the average time it take from the purchase of inventory to the collection of cash from customers. For most businesses, the cycle is less than a year so a one-year cutoff is used. Current assets are listed in the order in which converted to cash (liquidity)
