Multiple Choice
What is the usual order for the asset subgroups presented on a classified balance sheet?
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2. Transaction Analysis
Classified Balance Sheet Components
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Plant assets are ordinarily presented in the balance sheet under which section?
A
Current assets
B
Current liabilities
C
Noncurrent assets
D
Stockholders' equity
Verified step by step guidance1
Understand the concept of plant assets: Plant assets are long-term tangible assets used in the operations of a business, such as buildings, machinery, and equipment. They are not intended for resale and are classified as noncurrent assets.
Review the classification of assets on the balance sheet: The balance sheet is divided into sections such as current assets, noncurrent assets, current liabilities, and stockholders' equity. Each section represents a different category of financial information.
Identify the correct section for plant assets: Since plant assets are long-term and not expected to be converted into cash within a year, they are classified under noncurrent assets.
Compare plant assets with other sections: Current assets include items like cash and accounts receivable, which are expected to be converted into cash within a year. Current liabilities represent obligations due within a year, and stockholders' equity represents the owners' residual interest in the company. None of these categories fit the definition of plant assets.
Conclude that plant assets are presented under noncurrent assets in the balance sheet, as they are long-term resources used in business operations.
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