What Are the Major Subclassifications of Assets That Are Included on a Balance Sheet?
The balance sheet essentially shows a snapshot of the financial wellbeing of the company at any given point. When looking at the balance sheet, you will notice assets listed as well as liabilities. The assets are typically broken up into several subclassifications so that you can see where the majority of them are coming from.
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Cash
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The cash that a company has is one of the most basic sub-categories of assets on a balance sheet. The amount of cash that a company has on hand is important because it shows how easily a company could pay for short-term liabilities if necessary. While you do not want to leave too much money in cash, it can be helpful to have some on hand.
Accounts Receivable
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Another important category that is typically included on the balance sheet is accounts receivable. The accounts receivable represents the amount of money that customers owe you for sales that you have made. While you may not necessarily have the money yet, you know that you can count on it coming in at some point in the future when your customers by their bills. Some of the money may have to be written off as bad debt if it is not paid in a timely manner.
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Prepaid Items
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Prepaid items is an important balance sheet category. These are items that you have paid for in advance but have not yet received services for yet. For example, you may have prepaid your insurance premium when you have the money but the insurance term has not yet been used up. Some companies also prepay other items such as utilities and legal services.
Real Estate
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The real estate the company owns is often included on the balance sheet and sometimes broken down into two different categories. You may see a category for land and another category for buildings. In some cases, the real estate could be a substantial asset but it would take some time to liquidate these assets if needed.
Equipment
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The equipment the company owns often appears on the balance sheet. This could include office equipment, warehouse equipment, vehicles and any other items that the company uses for regular business operations.
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