1. Classified Balance Sheet Concept
A classified Balance Sheet groups assets and liabilities into categories based on liquidity. This helps users quickly check if a company has enough short-term resources to pay its upcoming bills.
2. Categorizing Assets and Liabilities
  • Non-Current Assets: Long-term resources used to run the business for over a year (e.g., Property, Plant, Equipment). They are reported at historical cost minus accumulated depreciation.
  • Current Assets: Cash and other resources expected to be turned into cash, sold, or consumed within one year (e.g., Inventory, Receivables, Prepaid Expenses).
  • Current Liabilities: Obligations due to be settled within 12 months (e.g., Accounts Payable, Short-Term Bank Overdrafts, Accrued Expenses).
  • Non-Current Liabilities: Long-term financial obligations due after one year (e.g., Bank Mortgages, Long-Term Bonds).

3. Structural Presentation Formats
  • Horizontal Format: Displays Assets on the left side and Liabilities and Equity on the right side.
  • Vertical (Report) Format: Lists assets first, subtracts liabilities to find net assets, and then shows how those net assets are funded by equity. This layout emphasizes the net worth of the business.
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