A Classified Balance Sheet Differs from an Unclassified Balance Sheet

question 77

Multiple Choice

A classified balance sheet differs from an unclassified balance sheet in that

• A)An unclassified balance sheet is never used by large companies.
• B)A classified balance sheet groups items into the broad categories of asset,liability,and equity.
• C)A classified balance sheet presents information in a manner that makes it easier to calculate a company's current ratio.
• D)A classified balance sheet will include more accounts than an unclassified balance sheet for the same company on the same date.
• E)A classified balance sheet is not usually provided to outside parties.

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Definitions:

Internal Control

Processes adopted by organizations to ensure accuracy and integrity in financial reporting, operational efficiency, and compliance with laws and regulations.

Financial Statements

Formal records that outline the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Inventory Costing Methods

Strategies used by companies to assign costs to inventory and to determine the cost of goods sold, including FIFO (First In, First Out), LIFO (Last In, First Out), and weighted average cost.

LIFO Method

An inventory valuation method that assumes the last items of inventory purchased are the first ones sold, potentially minimizing taxes in an inflationary period.