6. The Classified Balance Sheet

Let's take a look at the classified balance sheet. So we've already looked at the balance sheet and talked about how it's really just a representation of the accounting equation. So in a regular balance sheet, you see something like assets up at the top, and then you'll see liabilities plus equities, and then all the assets will sum to some number, and all the liabilities and equities will sum to that same number. And that's how you verify assets equals liabilities plus equities. So a classified balance sheet isn't really that different. You're still gonna have assets, liabilities, and equities, but the difference here is this word classified. And so the way that we're gonna classify things is by either current or non-current.

So when you see the word classified, you immediately think, "Okay, well, I need to split these up in some sort of class grouping." And the class grouping is you're gonna group it by current, or you're gonna group it by non-current. So if this is a plain old, regular balance sheet, the classified isn't too different. You've got assets, but instead of just assets, we're gonna call these current assets. You've got a bunch of things, and it comes out to some subtotal. And then you've got... Well, if you've got current, it stands to reason you should put non-current assets in there somewhere. A bunch of things comes out to some subtotal.

And then you're gonna have total assets. And that's just these two things added together, and you're gonna put some subtotal over here. So you see, so far, we haven't really done anything different than the regular balance sheet, except just split them up by current and non-current. 'Cause if you look, this is still assets, right? So these two things still are the same. So now what we're gonna do is take liabilities. So you've got liabilities. We're gonna do the same. We're gonna say current liabilities.

Non-current. And then you're gonna have total liabilities. And you put that out here along the same path as total assets. And so again, nothing different. This is just liabilities. We just happen to have classified it by current and non-current. And then the last thing is you're gonna have your shareholders' equity section, and we don't really do current or non-current for shareholders' equity. So what we're gonna do is we're gonna break that down by contributed capital, and you're gonna have par value and additional paid-in capital, and that'll come out to some contributed capital subtotal. And then you have retained earnings at some amount, and then you have total stockholders' equity at some amount.

And then at the bottom, you've got your total liabilities plus equity, and you put that over here. So let's zoom out a little bit and take a look at the whole thing. So the regular balance sheet is pretty simple compared to the classified one. It's just all of your assets right here, and then all of your liabilities and all of your equities, and you sum it up to make sure they match. Now, the classified balance sheet isn't too different. You just have to remember that you're gonna classify them by whether they're current or non-current. So you still go down the same order. You still take assets, current, non-current, put your total assets out here.

Liabilities, you do current, non-current, total liabilities out here. And then this section here is just your equity. So you have your contributed capital and your earned capital, money that people gave us and then money that we earned. And then you put that amount out here, and then you total your liabilities and your equity down here to make sure that your total assets match your total liabilities and equity, because this is still what we're representing. We're still representing assets equals liabilities plus equity. We're just splitting it up a little bit more, so you can see each component of liabilities and equities.