Balance Sheet Usefulness of Balance Sheet –Liquidity –Financial flexibility Limitations of Balance Sheet –Values are not current value –Estimates are used –Valuable resources and claims are not included

Balance Sheet Current Assets - cash and other assets expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer. –Cash –Short term Investments –Accounts Receivable –Receivables –Inventory –Prepaid Expenses

Balance Sheet Long-Term Investments Property, Plant, & Equipment Intangibles Other Assets

Balance Sheet Current Liabilities - obligations reasonably expected to be liquidated either through the use of current assets or the creation of other current liabilities Long-Term Liabilities Financial Instruments

Balance Sheet (cont) Owners’ Equity –Capital stock –Additional paid in capital –Retained earnings Classified Balance Sheet Format

Additional Information Contingencies –Gain not recorded until contingency is resolved –Loss recorded if probable and amount can be reasonably estimated if reasonably possible, then disclose the existence of the contingency Valuations & Accounting Policies Contracts & Negotiations

Additional Information (cont.) Subsequent Events –Events that provide additional evidence about conditions that existed at the balance sheet date, affect the estimates used in preparing financial statements, and, therefore, result in needed adjustments –Events that provide evidence about conditions that did not exist at the balance sheet date, but arise subsequent to that date and do not require adjustment of the financial statements

Additional Information (cont.) Techniques of Disclosure –Notes –Cross reference and contra items –Supporting schedules Terminology

Statement of Cash Flows Purpose Content & Format –Operating activities –Investing activities –Financing activities Preparation Usefulness of the Statement of Cash Flows