A basic balance sheet simply itemizes an entity's accounting equation.
It groups together assets, liabilities and owners' equity accounts and confirms that assets equal liabilities plus owners' equity as of a specific point in time.
A classified balance sheet provides additional details about different classes or subcategories of data. By classifying assets and liabilities as short-term or long-term, users can better understand when assets are expected to be used and liabilities are expected to be satisfied.
Short-term assets and liabilities are expected to be used or satisfied in the next 12 months or within one operating cycle, if the operating cycle is longer than a year.
Long-term assets and liabilities are expected to last for more than 12 months or one operating cycle.
