Chapter 3
Assessing the Balance Sheet’s Asset Section
IN THIS CHAPTER
Sticking with an asset’s historic cost
Listing common current assets
Distinguishing between tangible and intangible assets
Preparing the asset section of a balance sheet
Abalance sheet reports a company’s assets, liabilities (claims against those assets), and equity (the amount of money left when you sell what you own and pay what you owe). This chapter gets the party started by focusing on assets; Chapter 4 walks you through the liabilities section, and Chapter 5 covers equity.
Assets are resources a company owns and uses to generate revenue. Businesses have many different types of assets, which are categorized as either current or noncurrent. Current assets (such as checking accounts, accounts receivable, and inventory) are liquid, which means they either are cash or can quickly be turned into cash.
Noncurrent assets aren’t liquid; converting them to cash may take time. Converting these assets to cash may result in a loss or a gain on sale. Examples of noncurrent assets include tangible assets (things you can ...
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