On the balance sheet, the values of the various items a corporation owns are referred to as _. A. liabilities B. debts C. budgets D. assets E. savings
The correct answer and explanation is:
The correct answer is D. assets.
In accounting, a balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point in time. The balance sheet is divided into two main sections: assets and liabilities. The values of the various items a corporation owns are classified under assets, which represent what the company owns or controls and can include cash, accounts receivable, property, equipment, and inventory, among others.
Assets are typically categorized into two main types: current assets and non-current assets. Current assets are those expected to be converted into cash or used up within one year, such as cash, inventory, and accounts receivable. Non-current assets, on the other hand, are long-term assets that are not intended to be sold or used up within a year, like property, plant, and equipment (PPE), as well as intangible assets like patents and goodwill.
Liabilities, on the other hand, represent the financial obligations or debts of a company. These are the amounts the company owes to others, and they are also divided into current and non-current liabilities. Current liabilities are due within a year, such as accounts payable and short-term loans. Non-current liabilities are those due after one year, such as long-term debt and pension liabilities.
Assets and liabilities are both critical components of the balance sheet because they reflect the financial health of a corporation. The equity of a company, which is the difference between assets and liabilities, represents the value that belongs to the company’s shareholders.
In summary, on the balance sheet, the values of the various items a corporation owns are referred to as assets, and they provide insight into the company’s ability to generate revenue and manage its financial obligations.