FA101 Chapter 3c: Accrual-Basis Accounting

The Reporting Process: Financial Statements

After the completion of the trial balance financial statements are prepared. A Classified Balance Sheet groups a company’s asset and liability accounts into current and long-term categories.

There are four items to note about the classified balance sheet:

1. Total Assets equal current plus long term assets
2. Total liabilities equal current plus long term liabilities
3. Total Stockholders’ Equity includes common stock and retained earnings from the statement of stockholder’s equity
4. Total assets must equal total liabilities plus stockholders equity