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Those assets that cannot be converted into cash within a year are called long-term assets.

Money saved in a firm’s checking and savings accounts, currency and checks. Investments that a business can sell off within a year. Money that a company’s clients owe for services rendered that is payable in the short term. Items of value for which the company has already made a payment, like business insurance, office rent, etc. They have the following divisions: Assets The assets that can be converted easily into cash within a year or less are called current assets. These items will be listed in order of liquidity, that is, how easily they can be converted to cash.Īssets can be further subdivided into the following: In the assets section of the balance sheet, you will find items of value that can be converted into cash. Non-current liabilities include deferred tax liabilities, bonds payable, long-term debt and notes payable in the long term. Under current liabilities fall notes payable due within a year, current maturities of long-term, debt and accounts payable. Now, liabilities can be further subdivided into two categories: This section of the balance sheet shows the money that a company owes to others, like loan expenses, recurring expenses, other forms of debt, etc. There are three main components of a balance sheet. Moreover, you can pair a balance sheet with other financial statements to calculate financial ratios and conduct fundamental analysis. It helps evaluate a business’s capital structure and also calculates the rate of returns for its investors. A company’s balance sheet is a financial record of its liabilities, assets and shareholder’s equity at a specific date.