You are the executive assistant to Stephane Solden, a particularly hard-driving and successful owner of a chain of restaurants. Not long ago, Solden and you were flying to another city, and the inflight film was so bad the two of you ended up talking about all sorts of things. One subject was Solden’s impatience with accountants and accounting which, probably because the annual audit of the company’s accounts was then taking place, seemed particularly strong. How would you respond to the following questions from Solden?

1. ‘The main thing that sticks in my mind about the balance sheet is that the thing balances! Who cares? Why should it matter?’ 

2. ‘My auditor keeps wanting to talk to me about what the balance sheet says about the company’s finances and how I’ve managed them. But I always look to the future – why should I care about the balance sheet when it’s just a ‘‘snapshot’’ of history?’ 

3. ‘Last year, I had a really good idea about the balance sheet. You know, I consider our restaurant managers to be the most important asset the company has. I was going to have the managers added to the balance sheet as assets, so it would show all our assets. But the accountants and auditors didn’t seem interested in my idea. Why not?’ 

Required: 

Classify each item as it would be reported on a balance sheet using the following categories: current asset, noncurrent asset, current liability, noncurrent liability and shareholders’ equity.