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Classified Balance Sheets

The balance sheet we learned to prepare in Lesson 1 was an unclassified balance sheet, even though we didn’t call it unclassified. In this lesson, we will learn how to prepare a classified balance sheet. In a classified balance sheet, rather than simply listing our assets and liabilities, we further break down assets and liabilities into categories.

Assets

Assets will be broken down into the following categories:

Liabilities

Liabilities will be broken down into the following categories:

Stockholders’ Equity

The stockholders’ equity (owner’s equity) will still include only the following accounts:

We will discuss stockholders’ equity in further detail in a future lesson.

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