Classified Balance Sheet Components definitions Flashcards
Classified Balance Sheet Components definitions
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Classified Balance Sheet A financial statement format that separates assets and liabilities into current and long-term categories for clearer financial analysis. Current Assets Resources expected to be converted into cash or used up within one year, listed by how quickly they can be liquidated. Long-term Assets Resources intended for use over periods longer than one year, such as equipment, land, or patents. Current Liabilities Obligations due to be settled within one year, including short-term debts and amounts owed to suppliers. Long-term Liabilities Obligations not due within the next year, such as multi-year loans or bonds payable. Liquidity A measure of how quickly an asset can be converted into cash without significant loss of value. Cash The most liquid asset, representing currency or funds immediately available for use. Marketable Securities Investments like stocks or bonds that can be quickly sold for cash at a known market price. Accounts Receivable Amounts owed by customers for goods or services delivered, typically collected within a short period. Inventory Goods held for sale in the ordinary course of business, awaiting conversion into cash through sales. Prepaid Expenses Payments made in advance for goods or services to be received within one year, recognized as assets until used. Order of Liquidity The sequence in which assets are listed on the balance sheet, from most easily converted to cash to least. Equity The residual interest in the assets of a company after deducting liabilities, representing ownership value. Accounts Payable Amounts owed to suppliers for goods or services received, typically due within a short period.
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