Understanding Classified Balance Sheets

A classified balance sheet organizes assets and liabilities into categories, providing a clearer view of a company’s financial position. This format helps stakeholders assess liquidity, operational efficiency, and overall financial health. Below are three practical examples of classified balance sheets for different types of businesses.

Example 1: Retail Business Classified Balance Sheet

In this scenario, we examine a fictional retail company, ABC Retailers, which specializes in clothing and accessories. A classified balance sheet for ABC Retailers provides insight into their financial standing at the end of the fiscal year.

• Assets

  • Current Assets
    • Cash: $50,000
    • Accounts Receivable: $30,000
    • Inventory: $100,000
  • Non-Current Assets
    • Property, Plant, and Equipment: $200,000
    • Less: Accumulated Depreciation: $40,000
    • Total Non-Current Assets: $160,000
  • Total Assets: $310,000

• Liabilities

  • Current Liabilities
    • Accounts Payable: $20,000
    • Short-term Debt: $15,000
  • Long-term Liabilities
    • Long-term Debt: $50,000
  • Total Liabilities: $85,000

• Equity

  • Common Stock: $100,000
  • Retained Earnings: $125,000
  • Total Equity: $225,000

• Total Liabilities and Equity: $310,000

This classified balance sheet reveals that ABC Retailers has a healthy balance of assets to liabilities, indicating good financial management.

Example 2: Tech Company Classified Balance Sheet

Next, we look at a tech startup, XYZ Innovations, which specializes in software development. The classified balance sheet reflects the company’s assets and liabilities as of December 31, 2023.

• Assets

  • Current Assets
    • Cash: $200,000
    • Accounts Receivable: $50,000
    • Prepaid Expenses: $10,000
  • Non-Current Assets
    • Software Development Costs: $150,000
    • Equipment: $80,000
    • Less: Accumulated Depreciation: $20,000
    • Total Non-Current Assets: $210,000
  • Total Assets: $460,000

• Liabilities

  • Current Liabilities
    • Accounts Payable: $30,000
    • Short-term Loans: $20,000
  • Long-term Liabilities
    • Long-term Debt: $100,000
  • Total Liabilities: $150,000

• Equity

  • Common Stock: $100,000
  • Additional Paid-in Capital: $100,000
  • Retained Earnings: $110,000
  • Total Equity: $310,000

• Total Liabilities and Equity: $460,000

This balance sheet indicates that XYZ Innovations is leveraging its assets effectively, which is crucial in the competitive tech landscape.

Example 3: Non-Profit Organization Classified Balance Sheet

Finally, we explore a classified balance sheet for a non-profit organization, Helping Hands Charity, which provides community services. Their balance sheet reflects financials at the end of the fiscal year.

• Assets

  • Current Assets
    • Cash: $80,000
    • Accounts Receivable: $5,000
    • Grants Receivable: $15,000
  • Non-Current Assets
    • Property: $300,000
    • Less: Accumulated Depreciation: $50,000
    • Total Non-Current Assets: $250,000
  • Total Assets: $335,000

• Liabilities

  • Current Liabilities
    • Accounts Payable: $10,000
    • Short-term Loans: $5,000
  • Long-term Liabilities
    • Long-term Debt: $50,000
  • Total Liabilities: $65,000

• Net Assets

  • Unrestricted Net Assets: $200,000
  • Temporarily Restricted Net Assets: $70,000
  • Total Net Assets: $270,000

• Total Liabilities and Net Assets: $335,000

This classified balance sheet highlights Helping Hands Charity’s ability to manage its resources effectively while fulfilling its mission.