Balance Sheet Accounts: Assets Breakdown

Assets Comprising the Balance Sheet

Assets

Cash

This account records the cash, including checks and credit card tickets, entering the enterprise. It reflects deposits made to the bank, income received, and payments made. Generally, a sub-account called Petty Cash is used to record small cash outlays.

Banks

This account is used to control the money mobilized, typically referred to as checking accounts. Various operations, not always involving physical money, are usually carried out with banks. In such cases, the account controlling the operation should be complemented with a specific designation. For example:

• Bank Drafts Account
• Foreign Exchange Account
• Bank Account Discounting Drafts

Receivables

These documents control specific, duly formed claims held by the company. The most important business documents handled through this account are bills of exchange (or drafts) and promissory notes. To be registered in this account, these instruments must have been accepted by their debtors, meaning the debtor acknowledges the debt and pledges to settle it at maturity or on demand.

Accounts Receivable

This account is used to control amounts owed to the company that are not recognized through the acceptance of bills of exchange or promissory notes, but rather through invoices.

Merchandise Inventories

As the name suggests, this account, often simply called Inventories or Commodity Inventories, is used to reflect the value of goods owned by the company that were acquired or produced with the intention of selling them.

Prepaid Expenses

This account is used to group amounts paid in advance against future expenses. Certain agreements or circumstances necessitate the use of this account. For example, insurance policies are generally paid in advance; it would be inaccurate to charge the entire disbursement as an expense in the month paid if the coverage satisfies subsequent months. Some subsidiary accounts in this group include:

• Prepaid Insurance
• Prepaid Interest
• Tax Prepayments

Long-Term Investments

These consist of investment accounts representing long-term or permanent holdings in securities, real estate (not used by the company in its operations), equity accounts, loans, and shares in subsidiaries or affiliates.