Chapter 2 - a further look at financial statements. Reports the financial position of a company at a specific point in time. Classified means it reports resources and groups that have claims to resources. Whether a company will be able to pay its obligations when they become. Basic classification is between current vs. non-current items. Reasonable to designate one year (or the operating cycle) as the dividing line between current and non-current items. The operating cycle is the average time that it takes to purchase goods or services, resell the goods or services, and collect the cash from customers. Current assets consist of cash and other assets that are reasonably expected to be converted into cash within one year or one operating cycle, whichever is longer. Current assets are listed on the balance sheet in order of liquidity (or. Catch-all"" category that includes items such as prepaid. Expected to be held for longer than one year.