A classified balance sheet shows subtotals for current and noncurrent categories. Which of the following best completes the statement: 'A classified balance sheet shows subtotals for current and ________ items'?

• A. noncurrent
• B. tangible
• C. operating
• D. liquid

Answer: (A)

Verified step by step guidance

1. Understand the concept of a classified balance sheet: A classified balance sheet organizes assets, liabilities, and equity into categories to provide a clearer financial picture. The main categories are current and noncurrent items.
2. Define current items: Current items are assets or liabilities expected to be used, sold, or settled within one year or the operating cycle, whichever is longer. Examples include cash, accounts receivable, and accounts payable.
3. Define noncurrent items: Noncurrent items are assets or liabilities that are not expected to be used, sold, or settled within one year. Examples include long-term investments, property, plant, and equipment, and long-term debt.
4. Analyze the options provided: The term 'noncurrent' directly complements 'current' in the context of a classified balance sheet. Tangible, operating, and liquid are not appropriate terms to complete the statement because they do not align with the classification structure of a balance sheet.
5. Conclude that the correct completion of the statement is 'noncurrent,' as it accurately reflects the organization of items in a classified balance sheet.