Chapter 7

Assessing the Balance Sheet’s Asset Section

In This Chapter

arrow Sticking with an asset’s historic cost

arrow Listing common current assets

arrow Distinguishing tangible and intangible assets

arrow Preparing the asset section of a balance sheet

Part III of this book is all about the financial statement called the balance sheet, which reports a company’s assets, liabilities (the claims against those assets), and equity. In Chapter 8, I walk you through the liabilities part of the balance sheet, and Chapter 9 is all about the equity part of the equation. This chapter gets the party started by focusing on assets.

Assets are resources a company owns. I like assets almost as much as I like 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 are not liquid; converting them to cash may take time and/or result in a loss of cost basis or principal. Examples of noncurrent ...

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