Chapter Five: Balance Sheet and Statement of Cash Flows Flashcards
Net Realizable Value
Amount expect to receive on asset (estimated amounts for accounts and notes receivable)
Classified Balance Sheet
Reports the accounting equation (assets = liabilities + equity) with the assets on the top or left side of the sheet and liabilities on the bottom or right side of the sheet
Sections of Classified Balance Sheet
Current Assets, Noncurrent Assets, Current Liabilities, Long-term Liabilities, and Stockholder’s Equity
Current Assets
listed first in order of liquidity
Types of Current Assets
Cash, Investments, Accounts and Notes Receivable, Inventory, and Prepaid Expenses
Cash
reported at fair value (face value), amounts on hand + amounts on demand accounts + money market funds
Investments
Purchasing of stock or bond, trading and available for sale reported at fair value and held-to-maturity reported as amortized
Accounts (sales) and Notes (interest and document associated) Receivable
estimated amount collectible, amounts owed to you, reported at net realizable value, report accrued interest
Inventory
reported as lower-of-cost-or-market, anything that can be sold in normal operations
Prepaid Expenses
unexpired (amount not used), pay for now and expect to receive benefits in the future
Types of Noncurrent Assets
Long-term Investments, Property, Plant, and Equipment, and Intangible Assets
Long-term investments
any investments held over one year, reported as fair value or cost for held to maturity securities
What is the difference between long and short term investments?
Intent to hold onto security
Property, Plant, and Equipment
long-term assets used in normal operations of business, reported at cost less accumulated depreciation (book value)
Intangible Assets
nonphysical substance and nonfinancial instrument, reported at book value, amortized (how long asset worth to us), goodwill not amortized
Current Liabilities
obligations due within 1 year, reported at face value
Long-term Liabilities
reported at present value, takes into account that there is value in future and moves to current liability as moves closer to maturity
Types of Stockholder’s Equity
Contributed Capital and Retained Earnings
Contributed Capital
what stockholder’s have invested in your company, reported at par value + anything else they paid in (paid in capital in excess of par value)