Classified Balance Sheet

Classified Balance Sheet

• Headings
• Name of Business
• Name of Statement
• Date (specific day)
• Current Assets
• Converted into cash or used up within a year
• Fixed Assets
• Plant and Equipment
• Long term assets
• Used for production of goods/services
• Current Liabilities
• Short term debts
• Paid within a year
• Long Term Liabilities
• Not due within a year
• Capital/Equity Section
• Same as before

Notes:

• Only category totals appear in 3rd column
• 2nd column is for account totals
• 1st column – HST, Net Income and Drawings
• Working Capital – difference between current assets and current liabilities

Common Size Balance Sheets

• Used for the same purpose as common size income statements
• It illustrates percentages just as common size income statements
• There are two 100% figures on this sheet:
• Total Assets
• Total Liabilities and Equity
• All assets are a percentage of total assets
• All liabilities and equity are a percentage of total liabilities and equity
• To calculate the percentages:
• Divide the individual amount by the total asset or total liability and equity
• You will get a decimal answer
• Select the percentage option from the formula bar in excel to convert to a percentage

Comparative Balance Sheets

• Allows companies to compare accounts from year to year
• Calculated the same way as income statements:
• Year 2 subtract Year 1 will get you the dollar increase/decrease
• Divide the dollar increase/decrease by year 1 and select the percentage option form the formula bar to calculate the percentage

GAAPs

The Consistencey Principle: Requires the same methods and procedures from period to period

The Materiality Principle: Accountants must follow GAAP’s except when it would be expensive to do so and if it means no difference if the rules were ignored.

The Full Disclosure Principle: All information needed for a full understanding of the company’s financial position must be included in the statements.