Unclassified balance sheet definition
/What is an Unclassified Balance Sheet?
An unclassified balance sheet does not provide any sub-classifications of assets, liabilities, or equity. Instead, this reporting format simply lists all normal line items found in a balance sheet in their order of liquidity, and then presents totals for all assets, liabilities, and equity. This approach does not include subtotals for any of the following classifications:
A balance sheet that includes these subtotals is called a classified balance sheet, and is the most common form of presentation. This presentation is needed in order to derive liquidity ratios, such as the current ratio, that depend on the presentation of current asset and current liability subtotals.
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When to Use an Unclassified Balance Sheet
An unclassified balance sheet can be appropriate when there are few line items to report, as may be the case for a shell company or a small business that has very few assets or liabilities. It may also be used for internal reporting purposes, where managers have less need for subtotals. If this approach is used, assets are presented in order of liquidity, so that cash is presented first and fixed assets are presented last. Similarly, liabilities are presented in order of when they are due, so that accounts payable are listed first and long-term debt is listed last.