A classified balance sheet shows how a company is performing financially at a specific point in time. The balance sheet illustrates the company's liabilities and assets, so interested parties can learn whether the worth of the assets balances out the liabilities. To make processing this information easier, the balance sheet typically includes a standard list of sections.
The classified balance sheet lists the company name and current date at the top. Below a heading labeled "Assets," subheadings name specific types of assets like "Current Assets." Under each subheading, an itemized list names each asset, with its value specified on the same line. At bottom of each subheading, the worth of the assets in that subheading is totaled. The "Liabilities" section follows the same format. Companies often abbreviate numbers by using hundreds to represent millions, and noting this abbreviation at the bottom of the sheet (see References 1).
"Current Assets," the first subheading, includes any assets the company believes it will use up by the end of the accounting period or year. The balance sheet itemizes assets by liquidity -- how fast the firm could convert them into cash. Items under this section could include "cash," "accounts receivable," "supplies," "inventory," "short-term investments" and "prepaid insurance."
Long-Term, Fixed and Other Assets
The subheading "Long-Term Investments" comes next, itemizing all investments that the company expects will continue performing after the accounting cycle or year ends. "Fixed Assets," the next subheading, specifies property such as land, buildings, furniture and equipment. Lastly, "Intangible Assets" lists any assets that can't be easily measured, like patents, copyrights and permissions. The balance sheet specifies the total worth of the company's assets on the next line.
"Current Liabilities," the first subheading under "Liabilities," lists "notes payable," "accounts payable," "current income taxes," "merchandise credit," "salary and wages" "short-term loans" and any other liabilities the company must pay by the end of the year or accounting period. The next subheading, "Long-Term Liabilities," lists debts the company will pay off over a longer period of time. Long-term liabilities may include mortgage, bonds and loans.
"Equity," or "Stockholders' Equity," is the last major heading on the classified balance sheet. Equity is the proceeds remaining after subtracting liabilities from assets. "Stocks," which go to stockholders, and "retained earnings," which the company keeps, are listed under this subheading.
- "Financial Accounting"; Paul D. Kimmel et al.; 2010
- "Financial ACCT 2010"; Norman H. Godwin et al.; 2010
- Entrepreneur: Balance Sheet