How to Create a Classified Balance Sheet

Video Transcript

"Hi, I'm Ryan Lavine with Utah Working Capital and I'd like to talk about how to build a classified balance sheet. A balance sheet is made up of three main components. First of all, all of the assets which contains everything a company owns including all of the cash in it's accounts, it's computer equipment, it's building and inventory, anything else that a company owns that's legitimately in their possession. The second is the liabilities, everything that a company owes whether it's debt on a loan to a bank or accounts payable based on services that other companies or individuals have provided to you. The third is the owners' equity which is the true value of the company. This is everything that the investors have contributed in capital with any retained earnings that may have been earned over subsequent years. A classified balance sheet takes each of these main three sets and builds subsets within specific classes. Within the assets, there are five main components, five main classes within the assets section. First is current assets which will include cash, inventory, accounts receivable. The second is property, plant, and equipment which includes buildings or other machinery or equipment used to run the business. The third is investments, long term investments, stock, or other investments that a company's made, possibly in other companies or or or other just investments owned by a company. The fourth is goodwill assets which includes any trademarks or any goodwill that a company may established or have value for, and five is simply other assets, anything that doesn't fit those classifications. In the liability section, there's only two main classes. Short-term debt is anything that's due within one year and long-term debt is anything that's due greater than one year. Under stock holder's equity, there's only three main classes. The first is contributed capital given from the the the shareholders of the company. Second is is additional paid in capital which is any value that a stockholder may have paid in addition to the original par amount, and then the third classification is retained earnings which is any money that has been earned over previous years less any dividends that have been paid. For further additional questions, contact us at utworkingcapital@gmail.com."