Classified balance sheet

A classified balance sheet presents information about an entity's assets, liabilities, and shareholders' equity that is aggregated (or "classified") into subcategories of accounts. It is extremely useful to include classifications, since information is then organized into a format that is more readable than a simple listing of all the accounts that comprise a balance sheet. When information is aggregated in this manner, a balance sheet user may find that useful information can be extracted more readily than would be the case if an overwhelming number of line items were presented. The most common classifications used within a classified balance sheet are:

  • Current assets
  • Long-term investments
  • Fixed assets (or Property, Plant, and Equipment)
  • Intangible assets
  • Other assets
  • Current liabilities
  • Long-term liabilities
  • Shareholders' equity

The sum of these classifications must match this formula (known as the accounting equation):

Total assets = Total liabilities + Shareholders' Equity

The classifications used can be unique to certain specialized industries, and so will not necessarily match the classifications shown here. Whatever system of classification is used should be applied on a consistent basis, so that balance sheet information is comparable over multiple reporting periods.

There is no specific requirement for the classifications to be included in the balance sheet. The following items, at a minimum, are normally found in a balance sheet:

Current Assets:

  • Cash and cash equivalents
  • Trade and other receivables
  • Prepaid expenses
  • Investments
  • Inventories
  • Assets held for sale

Long-Term Investments:

  • Investments in other companies

Fixed Assets:

  • Computer hardware
  • Computer software
  • Furniture and fixtures
  • Leasehold improvements
  • Office equipment
  • Production equipment
  • Accumulated depreciation

Intangible Assets:

  • Intangible assets
  • Accumulated amortization
  • Goodwill

Current Liabilities:

  • Trade and other payables
  • Accrued expenses
  • Current tax liabilities
  • Current portion of loans payable
  • Other financial liabilities
  • Liabilities held for sale

Long-Term Liabilities:

  • Loans payable
  • Deferred tax liabilities
  • Other non-current liabilities

Shareholders' Equity:

  • Capital stock
  • Additional paid-in capital
  • Retained earnings

Classified Balance Sheet Example

Here is an example of a classified balance sheet, where the classifications are listed in bold in the first column:

Holystone Dental Corp.
Statement of Financial Position

(000s) as of 12/31/x2 as of 12/31/x1
ASSETS    
Current assets    
Cash and cash equivalents $270,000 $215,000
Trade receivables 147,000 139,000
Inventories 139,000 128,000
Other current assets 15,000 27,000
Total current assets 571,000 509,000
     
Fixed assets    
Furniture and fixtures 551,000 529,000
Leasehold improvements 82,000 82,000
Office equipment 143,000 143,000
Total non-current assets 776,000 754,000
     
Total assets $1,347,000 $1,263,000
     
LIABILITIES AND EQUITY    
Current liabilities    
Trade and other payables $217,000 $198,000
Short-term borrowings 133,000 202,000
Current portion of long-term borrowings 5,000 5,000
Current tax payable 26,000 23,000
Accrued expenses 9,000 13,000
Total current liabilities 390,000 441,000
     
Long-term liabilities    
Long-term debt 85,000 65,000
Deferred taxes 19,000 17,000
Total non-current liabilities 104,000 82,000
     
Total liabilities 494,000 523,000
     
Shareholders’ Equity    
Capital $100,000 $100,000
Additional paid-in capital 15,000 15,000
Retained earnings 738,000 625,000
Total equity 853,000 740,000
     
Total  liabilities and equity $1,347,000 $1,263,000