A //''balance sheet''//, also known as a "statement of financial position", reveals a company's [[Assets]], [[Liabilities]] and owners [[Equity]] (net worth). The balance sheet, together with the [[Income Statement]] and [[Cash Flow Statement]], make up the cornerstone of any company's financial statements.

|[[Assets]]||Liabilities and Owners' [[Equity]]||h
|[[Cash]]|\$6,600|[[Liabilities]]||
|[[Accounts Receivable]]|\$6200|[[Current Liabilities]]|
||| [[Accounts Payable]]|
|||[[Long-term Liabilities]]|
||| [[Notes Payable]]|\$30000|
|||''//Total liabilities//''|\$30,000|
|||||
|Tools and equipment|\$25,000|Owners' [[Equity]]||
|||[[Capital stock]]|\$7000|
|||[[Retained Earnings]]|\$800|
|||||
|[[Total Assets|Assets]]|\$37800|Total [[Liabilities]] and [[Equity]]|\$37800|

The main formula behind balance sheets is:
$ \Large \text {Assets} = \text{Liabilities} + \text{Shareholders' Equity}$

This means that assets, or the means used to operate the company, are balanced by a company's financial obligations along with the equity investment brought into the company and its retained earnings.

Source: http://www.investopedia.com/articles/04/031004.asp
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mbi_public
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Sun, 06 Feb 2011 20:09:44 GMT
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dirkjan
modified
Sun, 06 Feb 2011 20:09:44 GMT
modifier
dirkjan
creator
dirkjan