Book 4 Flashcards
is a balance sheet that was expanded by adding subsections for current assets; property, plant, and equipment; current liabilities; and long-term liabilities.
classified balance sheet
Cash and other assets that are expected to be converted into cash, sold, or used up usually within a year or less, through the normal operations of the business, are called
current assets
Property, plant, and equipment (also called plant assets) include assets that depreciate over a period of time. Land is an exception, as it is not subject to depreciation.
fixed assets
Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets are called
current liabilities
Liabilities not due for a long time (usually more than one year) are called
Long term liabilities
is the stockholders? right to the assets of the business. It is presented on the balance sheet below the liabilities section, Capital stock and Retained earnings
stockholders equity
Accounts that are relatively permanent from year to year are called ________ These accounts are carried forward from year to year.
permanent accounts or real accounts.
Accounts that report amounts for only one period are called. Temporary accounts are not carried forward because they relate to only one period. LO 3
temporary accounts or nominal accounts
a temporary account that is only used during the closing process
income summary
the ability to convert assests into cash is caled
liquidity
the ability of a business to pay its debts is called
solvency
the excess of the current assets of a business over its current liability, current assets-current liabilities
working capital
is another means of expressing the relationship between current assets and current liabilities. The current ratio is computed by dividing current assets by current liabilities.
current ratio
