Sections of the Balance Sheet

A description of the different classifications in the balance sheet are described. Understand what current assets and liabilities are and the associated long term sections of fixed assets and long term debt. Gain an understanding of the equity section of the balance sheet.

Construction Accounting – Balance Sheet Construction in Process Accounts

Construction accounting consists of three major groups of accounts.  The first and most understood set are the accounts found on the profit and loss statement.  Customarily referred to as Cost of Goods Sold or Costs of Construction, these accounts convey the total costs of construction against the revenue earned for those contracts.  The second major …

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Long Term Debt – Financial Statement Presentation

Long Term Debt is one of the multiple forms of capitalizing a business.  It includes bonds, secured notes and mortgage notes.  In the world of small business, the most common form of long term debt is secured notes, most likely with recourse.  As an owner of a business you need to understand how this information …

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Current Liabilities Section of the Balance Sheet

The current liabilities section of the balance sheet identifies those amounts due to third parties within the current year.  These include accounts payable, credit card accounts, accrued payroll, taxes, unearned revenue, deposits and those amounts due within one year related to debt instruments.  In general they are listed from the most immediate amounts due to …

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Deferred (Unearned) Revenue – Definition and Accounting Procedures

Deferred or unearned revenue is an advance payment made by a customer for a product or service that has not yet been rendered (delivered).  It is a very common economic transaction.  When you book and prepay for your airline ticket, the flight service records this as unearned revenue.  Once you board the plane and land …

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The Fixed Assets Section of the Balance Sheet

The fixed assets section of the balance sheet is one of the easiest sections to read and understand.  This article is written to describe and illustrate some simple examples of the fixed assets section.  I am not teaching the reader about the accounting system(s) used for fixed assets or how to calculate depreciation.  This article …

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An Explanation of Current Assets

The asset side of the balance sheet is divided into 3 major sections.  They include current assets, fixed assets, and other assets.  Current assets carry the most value to the small business entrepreneur because of the cash conversion aspect.  Cash is the blood that keeps a business alive.  So what are current assets?  How do …

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