Understanding Balance Sheet Entries

Medium Financial Statements Balance Sheet

Effective Use of Financial Statements

XYZ Corporation is a manufacturing firm that uses the accrual basis of accounting. At the end of the financial year, their balance sheet provides insight into accounts receivable, inventory, and total liabilities.

Based on this information, which of the following statements about XYZ Corporation's balance sheet is true?

Accounts receivable are reported at their outstanding balance, regardless of whether payment has been received.

Inventory can include raw materials, work-in-progress, and finished goods, all valued at their selling prices.

Total liabilities include both current and long-term obligations that are expected to be settled in the future.

Hint

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