Let's dive in some more on the Balance Sheet, also known as the Statement of Financial Position...
Question
What is reported on a Balance Sheet? How is it organized?Answer
A Balance Sheet shows what a company owns (assets), owes (liabilities), and what its "book value" (equity) is. Accounts are organized by more liquid/shorter time frame to less liquid/longer time frame.Analysis
The Balance Sheet organizes the financial position of a company. It generally will have assets on one side of the sheet and liabilities and equity on the other:
One of the basic equations of accounting is that Assets = Liabilities + Equity and the format of the report reflects this.
In further entries, we'll build the Balance Sheet with different kinds of accounts.
Vocabulary used:
For more information check out these links (comment to add your favourite link):
An article from Investopedia.com on how to read a Balance Sheet.
Where might you have come from?
Fact-orials Index
Accounting Principles:
Where might we go?
