This discussion thread test the Learning Objective of 3-2 Identify and describe the various balance sheet asset classifications and 3-3 Identify and describe the various liability and shareholders' equity classifications.

The usefulness of the balance sheet is enhanced when assets and liabilities are grouped according to common characteristics. The broad distinction made in the balance sheet is the current versus long-term classification of both assets and liabilities.

Required:

1. Discuss the factors that determine whether an asset or liability should be classified as current or long-term in a balance sheet.

2. Identify six items that under different circumstances could be classified as either current of long-term. Indicate the factors that would determent the correct classification.