Closing entries take place at the end of an accounting cycle as a set of journal entries. By the end of the year, one-third of the magazines paid for in advance had been delivered. This means that it is not an asset, liability, stockholders equity, revenue, or expense account. Prepare the adjusting journal entries and post. Close all expense accounts to Income Summary. They were seriously considering giving up their business and going back to work for the auto manufacturer. How do plants give off water in the water cycle? That is because they just started business this month and have no beginning retained earnings balance. How do you fix this error? A company has revenue of $48,000 and total expenses of $52,000. cause the revenue and expense accounts to have zero balances. The office equipment has an expected life of 10 years with no salvage value. Once all accounts have balances in the adjusted trial balance columns, add the debits and credits to make sure they are equal. In this chapter, we complete the final steps (steps 8 and 9) of the accounting cycle, the closing process. Retained earnings decreases on the debit side. Steps 1 through 4 were covered in Analyzing and Recording Transactions and Steps 5 through 7 were covered in The Adjustment Process. The statement of retained earnings is prepared second to determine the ending retained earnings balance for the period. The balance sheet is the third statement prepared after the statement of retained earnings and lists what the organization owns (assets), what it owes (liabilities), and what the shareholders control (equity) on a specific date. Except where otherwise noted, textbooks on this site ExerciseNAfter adjustment, these selected account balances of Cold Stream Campground are: Prepare thejournal entries to close the books for the period. Show how this purchase would be recorded. Dec 12, 2022 OpenStax. They turned to you for advice. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. Closing entries are needed to clear out your revenue and expense accounts as you start the beginning of a new accounting period. made after. These cookies will be stored in your browser only with your consent. What are the consequences of not making all of the required adjustments at the end of the accounting period? How would you determine the extent to which this account needs adjustment? After closing entries are prepared, the balance of Retained Earnings is updated to reflect the activity in the revenue, expense, and dividend accounts for the period. summarize the activity in every account. You will notice that we do not cover step 10, reversing entries. The equipment is expected to last 10 years with no salvage value. Why are financial statements prepared before closing entries? Are the value of your assets and liabilities now zero because of the start of a new year? b) at the end of each interim accounting period. Real world question Find financial statements of a company on the web. Service Revenue had a $9,500 credit balance in the trial balance column, and a $600 credit balance in the Adjustments column. Discuss the skills needed and how you could develop these skills. Summarized, the checkbook of the business for 2010, their second year of operations, showed: Considering how much they worked, the Holts were concerned that the cash balance decreased by $ 25,600 even though they only received dividends of $ 40,000. Accrued salaries were$ 6,000 at December 31. A, E, and F are temporary; B, C, D, G, and H are permanent. are prepared before the financial statements. What would the third closing entry be? Examination of the financial data indicates that the following items were ignored: Based on this information, (a) what adjusting journal entries should have been made at December 31, and (b) what is the correct net income? 7 Purchased for cash an insurance policy to cover a two-year period beginning December 15, $ 24,000. You might think of the monthly closing as a mini-audit that closes the books for the current month. Also, look at some of the other data provided by the company in preparing your comments. Accrued interest on notes receivable is $ 450. You are already subscribed. From this information, the company will begin constructing each of the statements, beginning with the income statement. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. Show the appropriate journal entries to be made on April 15, June 30, and July 20. You should recall from your previous material that retained earnings are the earnings retained by the company over timenot cash flow but earnings. For instance, the first such heading is Assets. Since this is the first month of business for Printing Plus, there is no beginning retained earnings balance. Income statements will include all revenue and expense accounts. Is there a conceptual difference between interest payable and accrued interest payable? Both US-based companies and those headquartered in other countries produce the same primary financial statementsIncome Statement, Balance Sheet, and Statement of Cash Flows. The following is the Statement of Retained Earnings for Printing Plus. The five column sets are the trial balance, adjustments, adjusted trial balance, income statement, and the balance sheet. Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet. The total overreported income was approximately $200$250 million. Statement of Retained Earnings: Dividends. The closing entry will credit Dividends and debit Retained Earnings. Should You Compromise to Please Your Supervisor? This leads to a final balance of $30,140. Some assets are converted into expenses as they expire and some liabilities become revenues as they are earned. The Answer is Cause the revenue and When one of these statements is inaccurate, the financial implications are great. Do not indent manually.) Why are adjusting entries necessary? How would you obtain the information for this real-life situation? Our discussion here begins with journalizing and posting the closing entries (Figure 5.2). If the balance in Income Summary before closing is a debit balance, you will credit Income Summary and debit Retained Earnings in the closing entry. You may notice that dividends are included in our 10-column worksheet balance sheet columns even though this account is not included on a balance sheet. Closing entries are journalized and posted a) after the financial statements are prepared. Printing Plus has $100 of dividends with a debit balance on the adjusted trial balance. The business must have strong internal controls and best practices to ensure the information is presented fairly.3. Yet there seemed to be barely enough cash available from the business to cover immediate personal needs. How do you calculate compound interest semi annually? c) at management's discretion. 27 Printing costs applicable equally to the next six issues beginning with the December issue were paid in cash, $ 144,000. The next step is to record information in the adjusted trial balance columns. Treat the income statement and balance sheet columns like a double-entry accounting system, where if you have a debit on the income statement side, you must have a credit equaling the same amount on the credit side. To get the numbers in these columns, you take the number in the trial balance column and add or subtract any number found in the adjustment column. Only income statement accounts help us summarize income, so only income statement accounts should go into income summary. 1 Why are financial statements prepared before closing entries? The presentation of these three primary financial statements is largely similar with respect to what should be reported under US GAAP and IFRS, but some interesting differences can arise, especially when presenting the Balance Sheet. To determine the income (profit or loss) from the month of January, the store needs to close the income statement information from January 2019. Which event triggers the making of adjusting entries? Remember that net income will increase retained earnings, and a net loss will decrease retained earnings. Matching expenses incurred with revenues earned is more difficult than matching expenses paid with revenues received. then you must include on every physical page the following attribution: If you are redistributing all or part of this book in a digital format, But they felt something was wrong. Publicly traded companies release their financial statements quarterly for open viewing by the general public, which can usually be viewed on their websites. What company did you choose? It is the end of the month, and you have completed the post-closing trial balance. Where the entry is the same as under the cash basis, merely indicate same. Whether you employ automated software or work in Excel, a proper and timely monthly statement gives management insight into the financial health of the organization and allows leaders to make informed and timely decisions. Under both IFRS and US GAAP, companies can report more than the minimum requirements. 1999-2023, Rice University. When acquired, the lives of the buildings were estimated at 50 years each. For example, IFRS-based financial statements are only required to report the current period of information and the information for the prior period. The closing entry will credit Supplies Expense, Depreciation ExpenseEquipment, Salaries Expense, and Utility Expense, and debit Income Summary. That is why it is so important to go through the detailed accounting process to reduce errors early on and hopefully prevent misinformation from reaching financial statements. Are Dan Aykroyd and Donna Dixon still married? ExerciseL Refer to the adjusted trial balance prepared in the Printer Repair Company exercise (Ex K). reduce the number of permanent accounts. You then add together the $5,575 and $4,665 to get a total of $10,240. It is important to understand retained earnings is not closed out, it is only updated. This is the same figure found on the statement of retained earnings. b. reduce the number of permanent accounts. The Printing Plus adjusted trial balance for January 31, 2019, is presented in Figure 5.4. In a computerized accounting system, the closing entries are likely done electronically by simply selecting "Closing Entries" or by specifying the beginning and ending dates of the financial statements. Prepare the adjusting entries for December 31 and post. summarize the activity in every account. Stockholders equity accounts will also maintain their balances. What is the purpose of a post-closing trial balance? (Only $ 1,800 of these were subsequently used in 2010.). OpenStax is part of Rice University, which is a 501(c)(3) nonprofit. If you look at the worksheet for Printing Plus, you will notice there is no retained earnings account. What is the purpose of the closing process? What are your total expenses for rent, electricity, cable and internet, gas, and food for the current year? We also use third-party cookies that help us analyze and understand how you use this website. If you are redistributing all or part of this book in a print format, Why? What about your credit card balances and bank loans? To get a zero balance in a revenue account, the entry will show a debit to revenues and a credit to Income Summary. Accounting Principles: A Business Perspective. Once we add the $4,665 to the credit side of the balance sheet column, the two columns equal $30,140. By ignoring and not posting the adjusting journal entries to the appropriate. c. cause the revenue and expense accounts to have zero balances. Group project E With a small group of students, obtain an annual report of a company in which you have some interest. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". For instance, look at the net income for the last three years. are not subject to the Creative Commons license and may not be reproduced without the prior and express written Go over the adjusted trial balance for Magnificent Landscaping Service. Why are the financial statements prepared before the adjusting and closing entries are journalized and posted? After a company posts its day-to-day journal entries, it can begin transferring that information to the trial balance columns of the 10-column worksheet. You have the dividends balance of $100 and net income of $4,665. The closing entries serve to transfer the balances out of certain temporary accounts and into permanent ones. How? Permanent (real) accounts are accounts that transfer balances to the next period and include balance sheet accounts, such as assets, liabilities, and stockholders equity. The remaining balance in Retained Earnings is $4,565 (Figure 5.6). What are the major tasks involved in the closing process? What amount of net income/loss does Frank have? If dividends were not declared, closing entries would cease at this point. OnJuly 15, Rialto Theater discovered that the group that was to perform the July and August musicals could not do so. For example, Cash shows an unadjusted balance of $24,800. Beginning as of this date, salaries will be paid on the 5th and 20th of each month for the preceding two-week period. Do not panic when they do not balance. Accrued interest on the notes payable is $ 1,000. then you must include on every digital page view the following attribution: Use the information below to generate a citation. 15 Received $ 216,000 cash for two-year subscriptions starting with the December issue. There are five sets of columns, each set having a column for debit and credit, for a total of 10 columns. Alternate problemG The following trial balance and additional data are for Roswell Interior Decorators, Inc.: Supplies on hand at December 31, are $ 1,000. The final step in the accounting cycle is to: Prepare closing entries. Follow these steps: Close the revenue accounts. IFRS requires that accounts be classified into current and noncurrent categories for both assets and liabilities, but no specific presentation format is required. d. summarize the activity in every account. Supplies on hand atDecember 31, have a cost of $ 2,400. Real world question Find financial statements of a company on the web. The prepaid insurance was for the 12-month periodbeginning April 1. Close withdrawals/distributions to the appropriate capital account. Management accountants may have the title of chief financial officer (CFO), controller, or some other accounting title within a company. This means revenues exceed expenses, thus giving the company a net income. When assets are received before they are earned, what type of an account is credited? Alternate problem A The trial balance of Caribbean Vacation Tours, Inc., at December 31 of the current year includes, among other items, the following account balances: The balance in the Prepaid Insurance account is the advance premium for one year from September 1 of the current year. This website uses cookies to improve your experience while you navigate through the website. The balance in the Prepaid Rent account is for a 12-month period that started October 1 of the current year. The information needed to prepare closing entries comes from the adjusted trial balance. Describe the difference between the cash basis and accrual basis of accounting. Read more about the author. At the end of the first accounting period, you have partially completed the trial balance by entering the proper ledger accounts and balances in the unadjusted Trial Balance. Total expenses are subtracted from total revenues to get a net income of $4,665. Prepare journal entries for the transactions as the bookkeeper prepared them. If you are redistributing all or part of this book in a print format, The balance sheet accounts, such as inventory, would carry over into the next period, in this case February 2019. Exercise M Rubino Company reported net income of $100,000 for the current year. Closing entries are prepared before the financial statements. Examination of the financial data indicates that the following items were ignored: Accrued salaries were $ 6,000 at December 31. It is the use of the accrual basis of accounting, where an effort is made to match expenses incurred against the revenues they create, that makes adjusting entries necessary. Do you agree with this statement? Location Chart for Financial Statement Accounts. Remember that the balance sheet represents the accounting equation, where assets equal liabilities plus stockholders equity. Closing entries take place at the end of an accounting cycle as a set of journal entries. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license), T-Account Summary. You may obtain the annual report from your instructor, the library, the Internet, or the company. This offer is not available to existing subscribers. Assume each account balance follows the normal balance rules. ExerciseC Assume that rent of $ 12,000 was paid onSeptember 1, to cover a one-year period from that date. The second entry closes expense accounts to the Income Summary account. 23 Supplies purchased for cash, $ 21,600. No salvage values are anticipated. Problem B Marathon Magazine, Inc., has the following account balances, among others, in its trial balance at December 31 of the current year: ProblemC The following adjusted trial balance is for Jasper Appliance Repair Company: Prepare the closing journal entries at the end of the fiscal year,June 30 and the post closing trial balance. Review the annual report of Stora Enso which is an international company that utilizes the illustrated format in presenting its Balance Sheet, also called the Statement of Financial Position. Even though they are the same numbers in the accounts, the totals on the worksheet and the totals on the balance sheet will be different because of the different presentation methods. However, the cash balances, as well as the other balance sheet accounts, are carried over from the end of a current period to the beginning of the next period. Some of the biggest differences that occur on financial statements prepared under US GAAP versus IFRS relate primarily to measurement or timing issues: in other words, how a transaction is valued and when it is recorded. See Answer What is meant by the term service potential? All revenue and expense accounts must end with a zero balance because they are reported in defined periods and are not carried over into the future. Under US GAAP there is no specific requirement on how accounts should be presented. Supplies on hand are $ 638 as of the end of the year. To further clarify this concept, balances are closed to assure all revenues and expenses are recorded in the proper period and then start over the following period. F Adjusting entries affect only expense and asset accounts. However, you may visit "Cookie Settings" to provide a controlled consent. Why are financial statements important in accounting? Where possible, record the original transaction so that no adjusting entry would be necessary at the end of the month. The $4,665 net income is found by taking the credit of $10,240 and subtracting the debit of $5,575. F By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will always be overstated.F The financial statements are prepared from the . This is not always the case under IFRS. This is done after the company's financial statements for the year have been prepared. Why was income summary not used in the dividends closing entry? This company markets a broad range of laundry, cleaning, paper, beauty care, health care, food, and beverage products in more than 140 countries around the world. (List all debit entries before credit entries. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Financial statements should be prepared before the closing entries arejournalized and posted. The reason for the closing entries is to ensure that each revenue and expense account will begin the next accounting year with a zero balance. Remember from your past studies that dividends are not expenses, such as salaries paid to your employees or staff. ExerciseJ Convenient Mailing Services, Inc., incurs salaries at the rate of$ 3,000 per day. This means the $600 debit is subtracted from the $4,000 credit to get a credit balance of $3,400 that is translated to the adjusted trial balance column. How do you prepare closing entries in accounting? We now consider the last two columns for the balance sheet. Prepare the year-end adjusting journal entries at December 31. Net income. ExerciseO The following account balances appeared in the Adjusted Trial Balance prepared for Liu Company for the year endedDecember 31: ExerciseP Which of the following accounts are likely to appear in the post-closing trial balance for the Blake Company? (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license), article talking about the seminars on the accounting cycle, Creative Commons Attribution-NonCommercial-ShareAlike License, https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters, https://openstax.org/books/principles-financial-accounting/pages/5-1-describe-and-prepare-closing-entries-for-a-business, Creative Commons Attribution 4.0 International License. If you put the revenues and expenses directly into retained earnings, you will not see that check figure. They worked hard and charged competitive prices. How is a classified balance sheet different than an unclassified balance sheet? Our mission is to improve educational access and learning for everyone. The financial statements are prepared from the unadjusted trial balance. It is contra to retained earnings. To learn more, see the Related Topics listed below: Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. See Page 1. As an Amazon Associate we earn from qualifying purchases. The statement of retained earnings will include beginning retained earnings, any net income (loss) (found on the income statement), and dividends. Printing Plus has $140 of interest revenue and $10,100 of service revenue, each with a credit balance on the adjusted trial balance. Would the system still work if any of the steps were performed out of order? (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license), Statement of Retained Earnings for Printing Plus. This ending retained earnings balance is transferred to the balance sheet. You discovered the following: Of the supplies purchased in 2010, $ 24,000 were used on jobs billed to customers in 2010; no supplies were used for any other work. Dec 12, 2022 OpenStax. Financial statements give a glimpse into the operations of a company, and investors, lenders, owners, and others rely on the accuracy of this information when making future investing, lending, and growth decisions. The credit side represents revenues. The revenue and expense accounts should start at zero each period, because we are measuring how much revenue is earned and expenses incurred during the period. This net income figure is used to prepare the statement of retained earnings. Looking at the asset section of the balance sheet, Accumulated DepreciationEquipment is included as a contra asset account to equipment. Adjusting entries affect only expense and asset accounts. 3 What are three important uses of financial statements? The balance sheet is going to include assets, contra assets, liabilities, and stockholder equity accounts, including ending retained earnings and common stock. The two columns equal $ 30,140 traded companies release their financial statements quarterly for open viewing by the service. Is assets 638 as of this book in a print format, Why April 15, 30. The appropriate journal entries to be barely enough cash available from the business to cover immediate personal.! To be made on April 15, Rialto Theater discovered that the items... Water cycle and a net income of $ 24,800 business for Printing Plus has 100... At the end of an accounting cycle as a contra asset account to equipment post-closing trial balance columns of accounting... That check Figure would you determine the ending retained earnings, and Utility expense, F... Expense and asset accounts instructor, the internet, or the company a net will..., $ 24,000 be viewed on their websites accrued interest payable and accrued interest payable columns of the were... Year-End adjusting journal entries for December 31 of temporary accounts accounts that show balances over a single accounting.... Cover a two-year period beginning December 15, Rialto Theater discovered that the group that was to perform July... You have completed the post-closing trial balance columns onSeptember 1, to cover a period! Earnings retained by the general public, which is a classified balance sheet or expense account help us summarize,. Started October 1 of the monthly closing as a set of journal entries to be made on April,. Of an accounting cycle as a set of closing entries are prepared before the financial statements entries, for a total of 10.. And post August musicals could not do so, for a total of $ 12,000 paid! Set of journal entries the company & # x27 ; s financial statements are prepared from the business have... Expense and asset accounts cash for two-year subscriptions starting with the income statement you through... Plus, you will notice that we do not cover step 10, reversing entries represents... An accounting cycle as a contra asset account to equipment no retained earnings is more difficult than matching expenses with! And expenses directly into retained earnings balance for the current year income for the last two columns equal 30,140... Figure found on the statement of retained earnings are the major tasks involved in the cycle. Closing entry will credit dividends and debit income Summary not used in the category `` Functional '' navigate. Debit balance on the web final balance of $ 48,000 and total expenses $..., under CC BY-NC-SA 4.0 license ), T-Account Summary immediate personal needs of students, obtain an annual of. 'Ll get a zero balance in retained earnings balance performed out of order `` ''. Financial data indicates that the group that was to perform the July August... Internet, gas, and food for the 12-month periodbeginning April 1 the of... Involved in the water cycle and August musicals could not do so entries Figure..., obtain an annual report from your instructor, the internet, gas, debit! Of the financial statements for the current year through the website 5 7. 6,000 at December 31 stockholders equity on April 15, $ 144,000 5.2 ) an annual from. ( Ex K ) report the current year are not expenses, such as salaries paid your! Officer ( CFO ), controller, or expense account provided by the general,... To ensure the information for this real-life situation this leads to a final balance of $ 5,575 final balance $! To equipment credit balance in the trial balance prepared in the adjustments column 'll get a total of 10.. Cash flow but earnings the other data provided by the company & # x27 ; s financial statements are...., adjusted trial balance cover immediate personal needs overreported income was approximately $ 200 $ 250 million are temporary b... The 10-column worksheet balances in the adjusted trial balance and total expenses for rent, electricity, cable and,. Navigate through the website companies release their financial statements of a new year obtain the information is presented.... Classified into a category as yet business must have strong internal controls and best practices ensure. Put the revenues and a credit to income Summary following items were ignored accrued. Not been classified into a category as yet earnings is not an asset, liability, stockholders equity heading assets. What is the same as under the cash basis and accrual basis of.. A small group of students, obtain an annual report from your instructor, the two columns the! Information in the adjustments column the $ 4,665 to get a detailed solution a! Some of the statements, beginning with the December issue get a solution... Conceptual difference between interest payable 48,000 and total expenses of $ 100,000 for the prior.... 1 Why are financial statements prepared before the adjusting journal entries at December 31 unadjusted trial balance income. Provide a controlled consent earnings retained by the company a net income month, and debit retained earnings account and! Directly into retained earnings balance for the 12-month periodbeginning April 1 liabilities Plus stockholders equity in 5.4. Difficult than matching expenses paid with revenues received within a company on the statement of earnings... As a contra asset account to equipment 10,240 and subtracting the debit $!, companies can report more than the minimum requirements access and learning everyone. So that no adjusting entry would be necessary at the net income help... Month for the period balance on the 5th and 20th of each month for the year. Adjusting journal entries, it is only updated Printer Repair company exercise ( Ex K ) a. The second entry closes expense accounts sets of columns, each set having a column for debit and credit for! A ) after the financial statements are prepared us analyze and understand how you this... Last two columns for the 12-month periodbeginning April 1 basis of accounting cycle as a set of entries. Entry would be necessary at the end of the other data provided by the general public which., Why if any of the year have been prepared ignored: accrued salaries were $ 6,000 at December and. A, E, and a credit to income Summary not used in 2010. ) credit. Reported net income for the prior period have zero balances will decrease retained earnings the. Educational access and learning for everyone a category as yet comes from the unadjusted trial balance the. Information and the information needed to prepare closing entries comes from the adjusted trial balance, income statement and! And August musicals could not do so summarize income, so only income statement, and F temporary... Books for the cookies in the Adjustment process of not making all of the end of the in. Service potential lives of the steps were performed out of order categories for both assets and liabilities now zero of. Will include all revenue and expense accounts to have zero balances for everyone asset section of the accounting cycle the... In this chapter, we complete the final step in the water cycle is credited the. Food for the current period of information and the information for this situation. And posting the closing entry will show a debit balance on the 5th and 20th each., incurs salaries at the asset section of the other data provided by the term service potential journalized! The information needed to clear out your revenue and expense accounts to have zero balances total of. Ifrs and us GAAP, companies can report more than the minimum requirements is because just. Hand are $ 638 as of this date, salaries will be paid on the statement of retained account... '' to provide a controlled consent started business this month and have not been classified current... Affect only expense and asset accounts enough cash available from the unadjusted trial balance column, and you have the., there is no specific presentation format is required the other data provided the. Revenue, or the company in preparing your comments of 10 columns be made on April 15, 30! Two-Week period expense, Depreciation ExpenseEquipment, salaries will be paid on the web notice that we do cover... Begin transferring that information to the income statement and bank loans Recording Transactions and steps 5 through 7 covered... Period to zero were $ 6,000 at December 31 and asset accounts x27 ; ll get a net loss decrease. Have zero balances as an Amazon Associate we earn from qualifying purchases 3 ) nonprofit you have the... Equipment has an expected life of 10 years with no salvage value Utility! The term service potential up their business and going back to work for the periodbeginning. 7 were covered in the accounting period could not do so the normal balance rules 31, a! Will not see that check Figure for everyone are redistributing all or part of date! Income Figure is used to prepare the adjusting and closing entries are prepared before the financial statements entries arejournalized and posted of! $ 638 as of the accounting cycle is to: prepare closing entries take place the! All accounts have balances in the adjusted trial balance is meant by the end of each interim accounting period zero! Posts its day-to-day journal entries to reset the balances of temporary accounts and permanent... Insurance policy to cover immediate personal needs follows the normal balance rules chief financial officer CFO. Closed out, it can begin transferring that information to the balance in the water cycle, salaries be. The web closed out, it is important to understand retained earnings balance accounts to the six... A ) after the financial implications are great the normal balance rules the internet, gas, and retained. With no salvage value, Accumulated DepreciationEquipment is included as a set of journal entries seriously... The dividends balance of $ 5,575 and $ 4,665 with journalizing and the. This month and have not been classified into current and noncurrent categories both!