Chapter 3, Problem 3.3E

To determine

Balance Sheet: Balance Sheet is a financial statement and it is used to summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.

a. Current assets:

Current asset is a cash or asset which can be easily converted into cash within one year. Some of the examples of current assets are cash, short-term investment, and accounts receivable.

b. Investments and funds:

The process of sacrificing today’s money for a future return is known as investment. Funds are the process of saving money for a particular purpose. Examples of investments and funds are bond, Long-term receivables.

c. Property, plant and equipment:

The assets that are physical in nature, and add value to the business in the future are referred to as tangible assets. Some of the examples of tangible assets are land, building and plant.

d. Intangible assets:

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. Some of the examples of intangible assets are goodwill, patents, and copyrights.

e. Other assets:

The assets which are not included in the current assets and current liabilities are referred to as other assets. Some of the examples of other assets are prepaid insurance, outstanding rent

f. Current liabilities:

Liability is an organization’s legal debt that occurs during course of thebusiness. Current liability is the debt, which the company is liable to pay the outsiders within a year. Some of the examples of current liabilities are accounts payable, salaries payable, Interest payable.

g. Long-term liabilities:

The liabilities which have a longer maturity period (more than one year) are referred to as long-term liabilities. Some of the examples of long-term liabilities are debenture and long-term loan.

h. Paid-in capital:

Paid-in capital is a part of stockholders’ equity that appears through the purchase of the company’s stock by investors or financiers. Paid-in capital refers to the capital stock.

The main source of paid-in capital is capital contributed by investors or stockholders in the company. Some of the examples of paid-in capital preference stock and preference share.

i. Retained earnings:

These are the amount of earnings andare not distributed as dividends to the shareholders.

To Classify: The following items in the appropriate category.