Balance Sheet

-


 

 The three main elements of a balance sheet are:

  • Assets
    These are resources owned or controlled by the business that provide future economic benefits. Assets are usually divided into Current Assets: expected to be used or converted into cash within one year (e.g., cash, accounts receivable, inventory) and Non-Current Assets: long-term investments not expected to be liquidated within a year (e.g., property, equipment, patents).

  • Liabilities
    These are obligations the company owes to outsiders—debts or future sacrifices of economic benefits. Liabilities are classified into:Current Liabilities due within one year (e.g., accounts payable, short-term loans).and Non-Current Liabilities payable after one year (e.g., long-term loans, bonds payable).
     

  • Equity (Owner’s Equity or Shareholders’ Equity)
    This represents the owners’ residual interest in the assets after deducting liabilities. It includes Capital / Share Capital, Retained Earnings and Reserves

The balance sheet provides a snapshot of what a company owns, owes, and the value left for owners at a particular date.


Comments

Post a Comment

Popular posts from this blog

Information needs for decisions

-
Information needs for decisions   Information needs refer to the specific types of data or knowledge a person requires to make a well-informed decision. These needs vary depending on the nature  of the decision and the decision-maker's context, preferences, and objectives. In real life imagine a kid, maybe with help from parents, thinking about where to get admitted for schooling. Even if the child already has some basic information —like which schools are nearby, their fees, or their study quality—they still need to make a decision . 
Read more

Internal & External Users

-
Internal users: Internal users i.e managers and employees who actually work for the business. Managers are also called internal decision makers. who need information about the company’s business activities to manage the operating, investing and financing activities of the firm. This accounting information for internal decision makers is called managerial accounting. External users:   External users i.e lenders, Stockholders (Owners),other creditors (suppliers), investors, customers, governmental regulatory and taxing agencies.  Stockholders and creditors are also called external decision makers and the accounting information for the external decision makers is called financial accounting and basic periodical financial statements produced by that financial accounting. Creditors make money on the loans by charging interest. Part owners or stockholders hope to receive  a portion of what the company earns in the form of cash payments called dividends and also sell thei...
Read more