Classified Balance Sheet

What classified balance sheet covers

A classified balance sheet groups items so a reader can judge liquidity and solvency at a glance: current and non-current assets, current and non-current liabilities, and equity. An item is current if it is expected to be realised or settled within the normal operating cycle or twelve months, whichever is longer. Presentation order and correct classification carry as much weight as the numbers themselves.

These challenges give you a list of balances and ask for a properly classified statement of financial position that balances.

Where marks are usually lost

• Classifying the current portion of a long-term loan as non-current.
• Netting assets against liabilities where no legal right of set-off exists.
• Reporting an asset at cost when a contra account such as accumulated depreciation should reduce it.