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Non-current assets are assets that are not turned into cash easily, are expected to be turned into cash within a year, and/or have a lifespan of more than a year. They can refer to tangible assets, such as machinery, computers, buildings, and land. Non-current assets also can be intangible assets, such as goodwill, patents, or copyrights. While these assets are not physical in nature, they are often the resources that can make or break a company—the value of a brand name, for instance, should not be underestimated.

What goes on a balance sheet

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A company should make estimates and reflect their best guess as a part of the balance sheet if they do not know which receivables a company is likely actually to receive. These operating cycles can include receivables, payables, and inventory. Shareholders’ equity reflects how much a company has left after paying its liabilities. Non-liquid assets that you need to hold onto to realize their full value.

Current (Short-Term) Assets

Your Guide to Growing a Business The tools and resources you need to take your business to the next level. Your Guide to Running a Business The tools and resources you need to run your business successfully. Small Business Stories Celebrating the stories and successes of real small business owners. Your Guide to Starting a Business The tools and resources you need to get your new business idea off the ground. A sample balance sheet for the fictitious Springfield Psychological Services at December 31, 2004 and 2003 is presented below, as an example.

• They’re usually salaries payable, expense payable, short term loans etc.
• This is debt that you have to pay back within a year—usually any short-term loan.
• Shareholders’ equity is one of two funding options available to a business.
• Doing so allows you to see how your financial circumstances have changed and identify areas for opportunity and improvement.
• A negative result would indicate that the company does not have enough assets to pay short-term debt.

Typical examples of assets include plants, machinery, cash, brands, patents etc. Assets are of two types, current and non-current, we will discuss these later in the chapter. While Apple retail accounting has more than $100 billion in current and non-current “other” liabilities — and this is certainly a lot of money — the key point to know is that this is a very broad category.

Firm of the Future

For most companies, this section of the cash flow statement reconciles the net income to the actual cash the company received from or used in its operating activities. To do this, it adjusts net income for any non-cash items and adjusts for any cash that was used or provided by other operating assets and liabilities. Next companies must account for interest income and interest expense. Interest income is the money companies make from keeping their cash in interest-bearing savings accounts, money market funds and the like. On the other hand, interest expense is the money companies paid in interest for money they borrow.