ACCT 1220 Lecture Notes - Lecture 2: Deferral, Financial Statement, Accounts Receivable

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Classified statement of financial position: a classified statement of financial position generally contains the following standard classifications: Current assets: assets expected to be converted to cash, sold or used in the business within one year or one operating cycle, whichever is longer. Operating cycle is the average time it takes to go from cash to cash in producing revenue: usually listed in order of liquidity: reverse order of liquidity also possible, examples include cash, held-for-trading investments, accounts receivable, inventory, and prepaid expenses. Non-current assets: assets not expected to be converted to cash, sold or used in the business within one year or one operating cycle, all assets not considered current, examples: Equity securities: shares of other companies: these assets are normally not intended to be sold (and converted to cash) within one year. Property, plant, and equipment: tangible assets with relatively long useful lives, used in operating the business, examples:

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