Reporting this statement is important because it is the main financial statement of the company. Current liabilities include all debts that will become due in the current period. In other words, this is the amount of principle that is required to be repaid in the next 12 months.

Common stock, additional paid-in capital, treasury stock, and retained earnings are listed for corporations. Partnerships list member capital accounts, contributions, distributions, and earnings for the period. Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment.

Free Financial Statements Cheat Sheet

An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance classified balance sheet as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors. The equity section of a classified balance sheet is very simple and similar to a non-classified report.

For instance, if there is a large shareholder loan on the books, it could mean the company can’t fund its operations with profits and it can’t qualify for a commercial loan. This information is important to any potential investor or creditor. The classifications used can be unique to certain specialized industries, and so will not necessarily match the classifications shown here.