Multiple Choice
Which of the following is NOT a major component or section of a classified balance sheet?
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2. Transaction Analysis
Classified Balance Sheet Components
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Which of the following correctly represents the usual order for the asset subgroups on a classified balance sheet?
A
Intangible Assets, Property, Plant, and Equipment, Long-Term Investments, Current Assets
B
Property, Plant, and Equipment, Current Assets, Long-Term Investments, Intangible Assets
C
Current Assets, Long-Term Investments, Property, Plant, and Equipment, Intangible Assets
D
Long-Term Investments, Current Assets, Intangible Assets, Property, Plant, and Equipment
Verified step by step guidance1
Step 1: Understand the concept of a classified balance sheet. A classified balance sheet organizes assets and liabilities into subgroups to provide more detailed information about the financial position of a company.
Step 2: Learn the usual order of asset subgroups on a classified balance sheet. Assets are typically listed in order of liquidity, which refers to how quickly they can be converted into cash.
Step 3: Recognize the subgroups of assets. These include Current Assets (most liquid), Long-Term Investments, Property, Plant, and Equipment (fixed assets), and Intangible Assets (least liquid).
Step 4: Arrange the subgroups in the correct order based on liquidity: Current Assets, Long-Term Investments, Property, Plant, and Equipment, and Intangible Assets.
Step 5: Compare the given options to identify the correct sequence that matches the usual order of asset subgroups on a classified balance sheet.
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