Balance Sheet
Balance sheet (or, the statement of financial position) - is a financial statement that shows the
assets, liabilities and owner’s equity of a business at a particular date.
Main purpose is to disclose the financial position of a business at a given date, and normally
done at the end of the accounting year.
Accounting year (or, accounting period) - occurs usually on any date other than January 1st to
December 31st.
Assets - are those items that can be transformed into cash or that generates income for the
enterprise.
Liabilities - are the obligations that are rising out of previous transactions, which is payable by
the enterprise.
Equity - is the remaining value of an owner's interest in a company, after all liabilities have been
deducted. (remaining capital, plus remaining profits,minus if loses)
Determine owner’s equity;
To determine the value of your assets, add up the total of everything that brings in income or
contributes to the profit of your business.
To determine the value of your liabilities add up the total of everythings that causes a business
to incur debt.
Apply the accounting equation;
Assets = Liabilities + Equities, there for,
Equity = Assets - Liabilities
Capital - is the value of the investment in the business by the owner.
Types of Assets
Current assets - means short term assets, are made up of assets a business can consume
within the period of one year.
Cash - equivalent amount of cash ready to lump-sum.
Account receivable - is an amount of cash due to a firm for goods or services delivered
or used but not yet paid for by customers.
Inventory - consisting of all raw materials, work-in-progress, and finished goods that a
company has accumulated.
, Marketable securities - include holdings such as stocks, bonds, and other securities that
are bought and sold daily.
Prepaid expenses - advanced payments for goods or services to be received in the
future, its value is expensed over time.
Non-current assets - means long term assets which continue to provide revenue for the
business over the course of many years.
Fixed assets - long-term assets that a company has purchased and is using for the
production of its goods and services. (tangible and intangible)
fixed tangible assets - have physical values such as equipment, furnitures, lands,
buildings, and vehicles, etc.
fixed intangible assets - lack physical existence but value by the people outside the
business such as patents, trademarks, copyrights, other intellectual property, etc.
(note: fixed assets value less depreciation)
Types of Liabilities
Current liabilities - means short-term liabilities, are a company's debts or obligations that are
due to be paid to creditors within one year.
Accrued expense - liabilities that refer to an expense that is recognized on the books
before it has been paid.
Account payable - are amounts due to vendors or suppliers for goods or services
received that have not yet been paid for.
Short term loans - the loan needs to be paid off in less than a year. (principal and
interest payable)
Unearned revenue - amount of money received before the service is rendered.
Taxes - a compulsory financial charge or some other type of levy imposed by the
government.
Non-current Liabilities - means a long term liabilities, are debts a company owes third-party
creditors that are payable beyond a year.
Mortgage payable - the liability of a business to pay a loan that is secured by property.
Notes payable - long-term liabilities that indicate the money a company owes its
financiers. (banks, financial institutions, friends or family members)
Bonds payable - is a liability that contains the amount owed to bond holders by the
business who is the issuer.
Capital lease - is a legal lease agreement of any business equipment or property which
is equivalent or similar to a sale of an asset by one party called the lessor to the buyer
who is called the lessee.
Deferred tax liability - taxes in a certain amount have not been paid but are due in the
future.
Balance sheet (or, the statement of financial position) - is a financial statement that shows the
assets, liabilities and owner’s equity of a business at a particular date.
Main purpose is to disclose the financial position of a business at a given date, and normally
done at the end of the accounting year.
Accounting year (or, accounting period) - occurs usually on any date other than January 1st to
December 31st.
Assets - are those items that can be transformed into cash or that generates income for the
enterprise.
Liabilities - are the obligations that are rising out of previous transactions, which is payable by
the enterprise.
Equity - is the remaining value of an owner's interest in a company, after all liabilities have been
deducted. (remaining capital, plus remaining profits,minus if loses)
Determine owner’s equity;
To determine the value of your assets, add up the total of everything that brings in income or
contributes to the profit of your business.
To determine the value of your liabilities add up the total of everythings that causes a business
to incur debt.
Apply the accounting equation;
Assets = Liabilities + Equities, there for,
Equity = Assets - Liabilities
Capital - is the value of the investment in the business by the owner.
Types of Assets
Current assets - means short term assets, are made up of assets a business can consume
within the period of one year.
Cash - equivalent amount of cash ready to lump-sum.
Account receivable - is an amount of cash due to a firm for goods or services delivered
or used but not yet paid for by customers.
Inventory - consisting of all raw materials, work-in-progress, and finished goods that a
company has accumulated.
, Marketable securities - include holdings such as stocks, bonds, and other securities that
are bought and sold daily.
Prepaid expenses - advanced payments for goods or services to be received in the
future, its value is expensed over time.
Non-current assets - means long term assets which continue to provide revenue for the
business over the course of many years.
Fixed assets - long-term assets that a company has purchased and is using for the
production of its goods and services. (tangible and intangible)
fixed tangible assets - have physical values such as equipment, furnitures, lands,
buildings, and vehicles, etc.
fixed intangible assets - lack physical existence but value by the people outside the
business such as patents, trademarks, copyrights, other intellectual property, etc.
(note: fixed assets value less depreciation)
Types of Liabilities
Current liabilities - means short-term liabilities, are a company's debts or obligations that are
due to be paid to creditors within one year.
Accrued expense - liabilities that refer to an expense that is recognized on the books
before it has been paid.
Account payable - are amounts due to vendors or suppliers for goods or services
received that have not yet been paid for.
Short term loans - the loan needs to be paid off in less than a year. (principal and
interest payable)
Unearned revenue - amount of money received before the service is rendered.
Taxes - a compulsory financial charge or some other type of levy imposed by the
government.
Non-current Liabilities - means a long term liabilities, are debts a company owes third-party
creditors that are payable beyond a year.
Mortgage payable - the liability of a business to pay a loan that is secured by property.
Notes payable - long-term liabilities that indicate the money a company owes its
financiers. (banks, financial institutions, friends or family members)
Bonds payable - is a liability that contains the amount owed to bond holders by the
business who is the issuer.
Capital lease - is a legal lease agreement of any business equipment or property which
is equivalent or similar to a sale of an asset by one party called the lessor to the buyer
who is called the lessee.
Deferred tax liability - taxes in a certain amount have not been paid but are due in the
future.
