Balance sheet component matching solution

Account Description
Accounts receivable Customers who have purchased on credit
– accounts to be collected.
Income taxes payable Corporate taxes for the period that must
be remitted to government.
Long-term debt Borrowing for business – one or multiple
loans where term is longer than 12
months.
Contingencies A potential future liability that the
company can reasonably estimate (eg,
from a pending lawsuit)
Property, plant & equipment Physical assets used to generate income
over a period of time greater than 12
months. Include things such as
buildings, furniture, computers, vehicles,
manufacturing equipment.
Inventory Goods either purchased or produced for
sale to customers.
Current portion of capital lease The amount owing over the next 12
obligation months for capital lease payments.
Cash and equivalents Cash or items that act like cash (eg, short
term money market funds) that a
business holds.
Common shares/stock Shares held by investors in the company.
These shares allow for voting rights and
participation in profits.
Current portion of long-term debt The amount of any loan(s) repayments
due within the next 12 month period.
Goodwill The premium paid on the acquisition of
another business.
Deferred income tax assets (expected to A timing difference due to the difference
reverse in 12 months) between accounting income and taxable
income. Difference will reverse in the
next reporting period.
Unearned revenue Revenues that have been collected from
customers but have not yet been earned
by the company (eg, performance of
service has not yet occurred, or product
has not yet been delivered).

Corporate Finance Institute 33767 • 1

Accounts payable
Retained earnings
Intangible assets
Capital lease obligation
Accrued liabilities
Prepaid expenses
Preferred shares/stock
Corporate Finance Institute
Supplier invoices that relate to the current
reporting period but that have not yet
been paid.
The accumulated profits and losses of the
business since inception. If the company
has more losses than profit, then this
would be stated as “retained deficit”.
Long term assets of the business that
have no physical substance. Examples
include licences, patents and
trademarks.
Capital leases are leases that are related
to specific assets. They act the same as a
loan – except instead of borrowing money
to purchase the item outright, the
company leases the asset – but all the
benefits of ownership are substantially
transferred through the lease.
Liabilities that are related to the current
reporting period but have not been paid.
Typical accrued liabilities include
compensation, audit and legal fees.
Expenses that have been incurred where
the service has not as yet been
“earned”/delivered. Typical prepaid
expenses include insurance, rent and
utilities.
Shares purchased by investors that have
fixed dividends that have a priority over
common shareholders.
33767 • 2
Balance sheet proforma
ASSETS
Current assets
Cash and equivalents
Accounts receivable
Inventory
Prepaid expenses
Deferred income tax asset
Non-current assets
Property, plant & equipment
Goodwill
Intangible assets
Corporate Finance Institute
LIABILITIES
Current liabilities
Accounts payable
Accrued liabilities
Unearned revenue
Income taxes payable
Current portion of long-term
debt
Current portion of capital
lease obligation
Non-current liabilities
Long term debt
Capital lease obligation
Contingencies
Shareholders’ equity
Common stock
Preferred stock
Retained earnings
33767 • 3