The assets section of the balance sheet should include
The assets section of the balance sheet should include all the resources owned by a company that have future economic value. These assets are classified into different categories based on their characteristics and expected usage.
To determine the specific items that should be included in the assets section of a balance sheet, you can follow these steps:
1. Identify the major categories of assets:
- Current Assets: These are cash and other assets that are expected to be converted into cash or used up within one year.
- Non-Current Assets: These are assets that are expected to be held for more than one year and include items like property, plant, and equipment, intangible assets, and long-term investments.
2. Determine the individual items within each category:
- Current Assets typically include cash, accounts receivable, inventory, prepaid expenses, and short-term investments.
- Non-Current Assets may consist of property, plant, and equipment (such as land, buildings, vehicles, and machinery), intangible assets (such as patents, copyrights, and trademarks), long-term investments (such as stocks and bonds), and other long-term assets.
3. Verify that the assets meet the criteria for recognition:
- An asset must meet the definition of an asset, which means it provides future economic benefits and is controlled by the company.
- Additionally, the asset should be measured reliably, which means its value can be reasonably estimated.
By following these guidelines and considering the specific requirements of generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS), you can identify the appropriate assets to include in the assets section of a balance sheet.