Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Classified Balance Sheet Components

Financial Accounting

2. Transaction Analysis

Classified Balance Sheet Components

Previous problem

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Multiple Choice

On a classified balance sheet, inventory is classified as which of the following?

Noncurrent asset

Current liability

Long-term liability

Current asset

Previous problem

Verified step by step guidance

Understand the concept of a classified balance sheet: A classified balance sheet organizes assets and liabilities into categories based on their liquidity or time frame for conversion into cash or settlement.

Learn the definition of inventory: Inventory refers to goods available for sale or raw materials used in production, which are expected to be sold or used within a short period, typically within one year.

Identify the classification of inventory: Inventory is considered a 'Current Asset' because it is expected to be converted into cash or sold within the operating cycle of the business.

Review the other options: Noncurrent assets are long-term resources like property, plant, and equipment. Current liabilities are obligations due within one year, and long-term liabilities are obligations due after one year. Inventory does not fit into these categories.

Conclude that inventory is classified as a 'Current Asset' on a classified balance sheet because it meets the criteria of being liquid within the operating cycle.