In the asset column, the accounts representing the assets and rights are arranged in decreasing order of liquidity. That is, it appears on top of that which can be turned into money more quickly if necessary. The asset is divided into current and non-current assets.
Current asset accounts
Current assets are cash and cash equivalents, that is, assets and rights that must be converted into cash, sold or consumed in the period of operations covered by the balance sheet. Therefore, they are the most liquid items of the asset. They are divided into the following subgroups:
Cash and cash equivalents: These are the most immediate financial resources. This category can be divided into subgroups such as “cash” (cash), “bank account in motion” (amounts in free movement current account), “financial investments” (short-term) and “demand bank deposits” (for checks or transfers that will enter the company’s account in the short term), among others.
Credits: These are rights that the company has to receive. Its subgroups include “trade receivables” or “customers” (receivables from sales), “Allowance for loan losses” (default estimate), “securities receivable” (promissory notes, loans receivable from third parties), etc.) and “other accounts receivable” (services provided and not yet invoiced, interest receivable, advance to suppliers, etc.).
Inventories: This group includes accounts for finished products, goods for resale, products in preparation, raw materials and other materials. This category also has a group called “Provision for adjustment to market value”, an asset reducing account whose purpose is to adjust inventory values considering possible losses, such as deterioration and reduction in sales prices.
Other credits: are accounts receivable that do not fit into the previous groups. This group includes taxes recoverable, advances to third parties, advances to employees, active rentals receivable, etc.
Prepaid expenses : expenses already paid that will only expire in the following year, such as insurance premiums, rents and consumption accounts, in addition to the anticipation of commissions, premiums, fees and the advance payment of interest, among others.
Non-current asset accounts
Non-current assets are the company’s most liquid assets and rights. These items cannot be converted into cash in the short term or can only be monetized after that year’s exercise. Non-current asset accounts are divided into the following categories:
Long-term assets: promissory notes, financial investments, deposits and advances, among others, all long-term.
Investments: are investments and financial investments of a permanent nature and with the objective of generating income for the company, such as investments in other companies, the possession of non-essential properties for the maintenance of activities, investments in gold and works of art, among others.
Property, plant and equipment: essential assets and rights to maintain the company’s activities, such as real estate, machinery and equipment, furniture and vehicles, among others.
Intangible assets: these are non-material assets, but they have value and are essential for the company’s activities, such as goodwill, trademarks, copyrights, patents, licenses, etc.
The liability can be divided into current liabilities and non-current liabilities. In accounting, the difference between the two classifications is due to the maturity date of the obligations. The liability accounts are classified in the balance sheet according to their maturity, that is, the accounts that mature before appear first.
Current liabilities correspond to short-term obligations, that is, debts and accounts that it will have to pay in the year following the presentation of the balance sheet (usually, within one year). If the payment term is longer, these accounts will enter the balance sheet as a non-current liability.
Both current and non-current liabilities can be divided into:
Obligations to suppliers: amounts payable resulting from the purchase of goods, raw materials and industrial inputs, among others. It is possible to subdivide this group between domestic and foreign suppliers.
Loans and financing: financial resources raised.
Taxes to be collected: taxes and other taxes that the company is obliged to collect.
Labor and social security obligations: salaries and other charges related to employees.
Participations and allocations of net income: the portion of the net income determined that must be paid to the partners.
Other obligations: rentals, water and electricity bills and other obligations not included in the other categories.
According to Law No. 11,638 / 2007, shareholders’ equity accounts can be divided as follows:
Share capital: details the amount subscribed and the portion not yet paid by partners and shareholders.
Capital reserves: these are resources obtained by the company that are not linked to profit formation. They arise, for example, from the reimbursement or purchase of shares, incorporation into capital and the payment of dividends to preferred shares, among others.
Equity valuation adjustments: the counterparts of increases or decreases in assets and liabilities that were not computed in the year, as a result of their revaluation, provided they follow the legal rules.
Profit reserves: values of the appropriation of part of the profits as a result of the law or the will of the owner.
Treasury shares: it is a reduction account of shareholders’ equity that records the value of the company’s shares acquired by the company itself.
Accumulated losses: records of accumulated losses and not yet covered.