It is a summary of a company's assets, liabilities and shareholders' equity at a certain point in time. Balance Sheet informs the inventors of what the company owns, owes and how much the shareholders have invested in the company.
A basic formula that a balance sheet has to achieve is:
Assets = Liabilities + Shareholders' Equity
Assets are the group of things that the company own. For example, car, cash, house and stocks.
Liabilities are the group of things on which the company owe money. For example, car loan, a student loan and a mortgage.
Equity is the same as "net worth." It is the left over after subtracting liabilities from assets. It is the portion of assets that the company own outright, without any debt.
No comments:
Post a Comment