Question

What is the FASB recommendations on the reporting of various items on balance sheet, such as current assets, current liabilities, and so forth?

Answer 1

FASB RECOMMENDATIONS ON THE REPORTING OF VARIOUS ITEM ON BALANCE SHEET----

The balance sheet format helps the user by grouping these accounts into classes such as the function of the account, the business use of the resources, and whether resources and liabilities are short-term or long-term. This balance sheet format is called the classified balance sheet.

The balance sheet lists assets in descending order of liquidity, with the most liquid assets listed first.

For example, Sunny Sunglasses Shop lists the current assets in order of liquidity, or how quickly the asset can be converted to cash.

Assets listed in descending order of liquidity

Cash Accounts Receivable Inventory Prepaid Expenses Non-current assets are also listed in order of liquidity. For example, companies list investments that are intended to be held for longer than one year as a non-current asset in the balance sheet accounts. Long-term investments include stocks, bonds, mutual funds, and long-term notes receivable. Fixed assets include office equipment, furniture, vehicles, machinery, buildings, and even land. Fixed assets are productive assets that are not intended for sale, but are employed to support the production or the sale of product or services. Liabilities are the debts owed by a business to others–creditors, suppliers, tax authorities, employees, etc. They are obligations that must be paid under certain conditions and time frames. A business incurs many of its liabilities by purchasing items on credit to fund the business operations. Report format: