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Receivables can generally be classified as accounts receivables or note receivable, though there are other types of receivables as well.Receivables can be classified as accounts receivables, notes receivable and other receivables ( loans, settlement amounts due for non-current asset sales, rent receivable, term deposits). Other receivables can be divided according to whether they are expected to be received within the current accounting period or 12 months (current receivables), or received greater than 12 months ( non-current receivables).
These sub-classifications support what might be viewed as an aggregate approach to balance sheet analysis. For example, the current ratio requires the sum of current assets and the sum of current liabilities to enable its computation. Although aggregated financial information of this nature is a necessity, the balance sheet often includes multiple elements within a group. The understanding of each element enhances one’s understanding of the sub-classification, its associated group, and ratios in which it is a component.
Let’s start with current asset first….
1.Current Assets
2. Cash And Cash Equivalents
3.Short-Term Investments Including Current Maturities Of Long-Term Investments
4.Accounts Receivables
5.Merchandise (Finished Goods) Inventories
