What Is a Non-Classified Balance Sheet?
Classified and nonclassified in relation to a company's balance sheet refer to how assets and liabilities are itemized. Unlike a classified balance sheet, a nonclassified balance sheet does not make a distinction between current and noncurrent assets and liabilities.
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Nonclassified Balance Sheet
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Generally accepted accounting principles in the United States allow company management to choose to present their balance sheet as either classified or nonclassified, according to accounting-financial-tax.com. If they choose the nonclassified method, assets and liabilities are not separated into current and noncurrent categories. In this case, assets and liabilities are arranged in descending order according to liquidity, or how quickly they can be paid off or sold.
Classified Balance Sheet
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A classified balance sheet is considered more useful for financial analysis, so this method is used more often according to QBResource.com. Unlike a nonclassified balance sheet, assets and liabilities are arranged in ascending order according to liquidity, with current assets and liabilities above noncurrent.
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Current vs. Noncurrent Assets
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A current asset is an asset that can be redeemed for cash over the next 12 months. Examples of a current asset include short-term investments, company inventory or accounts receivable. Noncurrent assets include all other assets. This includes assets such as company factories and equipment, long term investments and intangible assets such as the company's reputation and name recognition.
Current vs. Noncurrent Liabilities
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Current liabilities are company obligations that are expected to be paid off over the next 12 months. This includes items such as employee salaries, short-term loans, taxes and accounts payable. Noncurrent liabilities include all other liabilities, such as long term bonds, loans on property and other long-term obligations.
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References
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