ACCT 201 1st Edition Lecture 5Outline of Last Lecture I. Description of Statement of Cash FlowsII. Description of Balance SheetOutline of Current Lecture II. Continued description of Balance SheetCurrent LectureBalance Sheet:Assets = Liability + Shareholders’ Equity (SE) AssetsListed from most liquid to least liquid (how quickly something can be turned into cash)1. Current assets- Cash (highest liquidity)- Account receivable (the right to receive money in the future)- Inventory2. Long-term investments3. Property, Plant, and Equipment (P,P,E)4. Intangible Assets (copyrights, trademarks, etc.) goodwill- the most monetary asset, is thedifference between the amount of money used to purchase a copyright and the amount of money made buy selling the copyright5. Other- used for exceptions and is rarely usedLiability1. Current liabilities - _______ payable (obligation to pay for something)- Eg. Accounts, wages, salary, sales tax, property tax, income tax, etc.- Unearned revenue2. Long-term liabilitiesThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Shareholders’ Equity1. Contributed capital -> common stock2. Retained Earnings a. Net Income (Profit)i. Revenuesii. Expensesb. Dividends (cash payments to stockholders)Example of the accounting equation on a balance sheet:Assets = Liability + Shareholders’ Equity (SE)$120,000 $90,000 $30,000$90,000 $50,000 $40,000No matter what, the values of liability and SE must equal that of the assets. If one value is missing, you will always know what it is through simple
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