In other words, this is the amount of principle that is required to be repaid in the next 12 months. The most common current liabilities are accounts payable and accrued expenses. The financial statements shall be prepared to provide a true and fair view of the business’s financial affairs to the users of the statement.
A brief review of Apple’s assets shows that their cash on hand decreased, yet their non-current assets increased. However, it is mandatory to prepare and disclose the financial statements for public limited companies. A classified balance sheet presents an obvious picture of financial health. The equation will likewise remain the same in the classified balance sheet.
Related Standards
An investor who is keen on the everyday tasks and profitability of the firm might want to compute the current ratio. In a balance sheet, he would need to profoundly plunge into each segment and read notes explicitly for each liability and asset. In any case, in a classified balance sheet format, such a computation would be direct as the administration has clearly mentioned its current assets and liabilities. This format is significant in light of the fact that it gives users more data about the organization and its activities.
Apple’s total liabilities increased, total equity decreased, and the combination of the two reconcile to the company’s total assets. A classified balance sheet allows for better comparison with industry standards. Different industries have varying levels of liquidity and solvency requirements. By separating current and long-term assets and liabilities, a company’s financial statements can be compared to those of other companies in the same industry.