The document discusses the preparation of a classified balance sheet to describe the financial position of a business. It explains that a classified balance sheet separates assets and liabilities into current, non-current, and capital sections. The preparation procedure first involves creating a classified balance sheet that divides items into categories like current assets, non-current assets, fixed assets, intangible assets, current liabilities, non-current liabilities, and capital. An example of a classified balance sheet is then provided.