Name: Sheryl B.

Pastera
Year & Section: Btled - afa 3a
Direction: Read Lesson 7 and answer the following.
1. Define the following and classify the balance sheet using the categories. Classified
Balance Sheet commonly includes the following categories.
a. Current Assets - This is the asset that needs to be converted into cash or use
within one year. It include cash, accounts receivable, and inventory.
b. Investments- This includes long-term investments in stocks, bonds that are not
intended to be sold in the short term.
c. Plant Assets - They are long-term tangible assets that is used to produce goods or
services. This include buildings, machinery, vehicles, and land.
d. Intangible - These are non-physical assets that have value but do not have a
physical presence. It include patents, trademarks, copyrights, and goodwill.
e. Current Liabilities - These are obligations that are expected to be settled within
one year. Example : accounts payable, short-term loans, and payable expenses.
f. Long Term Liabilities - These are obligations that are not expected to be settled
within one year. Examples include long-term loans, bonds payable, and deferred
tax liabilities.
g. Equity - This represents the remaining interest in the business's assets after
deducting its liabilities. It includes retained earnings, and additional paid-in
capital.
2. Indicate each item’s typical classification by placing the letter of the correct balance sheet
category.
1 C Building
2 C Office Supplies
3 C Land held for future plant expansion
4 F Long-term note payable
5 A Accounts Receivables
6 G Retained Earnings
7 E Accounts Payables
8 G Retained Earnings
9 D Patents
10 A Wages Payable
11 E Prepaid Expenses
12 A Cash
3. Differentiate the following.
a. Cost of Goods Sold and Operating Expenses (give example base on the small
business activity conducted by the group)
- It includes the cost of raw materials, direct labor, and manufacturing overhead.
Example: In our small busines which we named Vegechips, the cost of flour,
 sugar, oil, carrot, karlang, sweet potato and packaging bag are we used to make
the chips. While Operating expenses are the costs incurred in running a business
that are not directly tied to the production of goods or services. Examples: In our
small business namely vegechips, the salaries of seller staff, salaries for cooking
staff, and advertising cost are the costs that we incurred in running this business.
b. Current asset and non-current assets
- These are assets that are expected to be converted into cash or used up within
one year. Example: For a small retail store, the cash in the cash register, inventory
of products for sale, and accounts receivable from customers .While Non- current
assets are assets that are not expected to be converted into cash or used up within
one year. Example: For the small retail store, the building or store premises,
delivery vehicles, and any long-term investments in other businesses.
c. Assets and Liabilities
- Assets are economic resources owned or controlled by a business, have a
measurable value, and are expected to provide future benefits.
Example: Cash, inventory, equipment, and accounts receivable.
Liabilities are obligations or debts that a business owes to external parties.
Example: Accounts payable, and loans payable.
d. Cash inflows and cash out flows (give example base on the small business activity
conducted by the group)
- Cash inflows refer to the money coming into a business, increasing its cash
balance. The cash inflows in our small business namely vegechips includes
sources such as sales revenue, While Cash outflows refer to the money going out
of a business, decreasing its cash balance. Example: In our the small business
namely vegechips, our cash outflows include salaries to cooking staff, and
payment to our staff who buys for vegechips supplies.
e. Liquidity Ratios and Solvency Ratios
- Liquidity ratio is focus on the company's ability to convert assets into cash
quickly to meet its current liabilities. While Solvency ratios measure a company's
ability to meet its long-term obligations and assess its long-term financial
stability.
f. Profitability Ratios and Efficiency Ratios
- Profitability ratios measure a company's ability to generate profits relative to its
sales, assets, or equity. Example: The gross profit margin, net profit margin, and
return on equity.
- Efficiency ratios measure a company's ability to utilize its assets and resources
efficiently to generate sales or revenue.