91Ó°ÊÓ

Every business entity prepares a financial statement at the end that includes balances of all the permanent accounts is known as a balance sheet.In general, it includes the resources and the obligations of the business entity.

1. Unclaimed payroll checks are the company’s liability and must be reported under the current liabilities section.

2. Debt investments are recorded at cost. Instead, they must be recorded at their fair value.

3. Bad debt reserve is not the correct terminology. The business entity must report it as an allowance for doubtful accounts and must be reported separately and deduction from accounts receivable.

4. Next, the first-out method is not allowed for inventory valuation. Another method of inventory valuation must be adopted.

5. Heading tangible assets is not appropriate. The business entity must use property, plant, and equipment in the heading.

6. Treasury stock must be reported in the section of owner’s equity and must be shown as a deduction from the common stock.

7. Discounts on bonds payable must be reported on the liabilities side of the balance sheet and shown as a deduction from the amount of bonds payable.

8. Sinking funds must be reported as long-term investments or non-current assets rather than other assets.

9. Land is a resource that does not have a limited life, and therefore, it is not charged with depreciation. Therefore, no accumulated depreciation must be represented on the balance sheet.

10. Stock represented as a long-term investment must be represented separately from the investment in bonds. It is represented as a non-controlling interest in the equity section.