Purpose:

Understand the information provided by the balance sheet.

Identify asset, liability, and stockholders' equity accounts reported on the balance sheet.

Understand the accounting equation.The balance sheet reports assets and the amount of financing from liabilities and stockholders' equity as of a specific date. This relationship represents the accounting equation, write the formula in the box below:

Assets are items of value that a corporation owns or has a right to use. Typical asset accounts include cash, accounts receivable, inventory, equipment, buildings, and land.

Liabilities are amounts owed to creditors; the amount of debt owed to third parties. Typical liability accounts include accounts payable, wages payable, notes payable, and bonds payable.

Stockholders' equity is the portion of assets the owners own free and clear. Stockholders' equity may also be referred to as shareholders' equity or owners' equity. Typical stockholders' equity accounts include:

Identify the $20$ X $3$ accounting equation amounts for Cool Lope, Inc. using the information above.

Assets $,$ Liabilities $,$ Stockholders ${?}^7$ Equity

Assets can either be financed with r

Will the accounting equation hold true for every corporation? $($Yes $/$ No $/$ Can't tell$)$ Why?

Cool Lope, Inc. is primarily financed with $($liabilities $/$ stockholders' equity$).$ How can you tell?

What is the definition of a current asset?

The following is a current asset $($inventory $/$ delivery truck $/$ taxes payable$).$

What is the Definition of a Current Liability?

The following is a current liability $($bond $/$ accounts payable $/$ accounts receivables$).$An example of a long$-$term assets is $($common stock $/$ equipment $/$ building $/$ prepaid expenses$).$ Select all that apply.

What is the definition of retained earning?

Now: Examine the annual report for the company you have selected with your CLC team for your "Financial Statement Analysis Report," and respond to the following questions using the most recent balance sheet provided.

What is the total for assets? Liabilities? Owners' equity?

What is the amount of accounts receivables?

What is the amount of inventory? What inventory valuation method $($LIFO $/$ FIFO $/$ Average cost$/$ Specific Identification$)$ do they use?

What is the total for current assets? Long$-$term assets?

What current asset has the largest balance? What Long$-$term asset has the largest balance?

What is the total for current liability? Long$-$term liability?

What is total stockholders' equity? What is the amount of retained earnings?

Assets are financed by either liabilities $($debt$)$ or stockholders$^2$ equity. Which is larger? Debt or stockholders equity for your company?