Tag: Balance Sheet

Arrangement of Assets and Liabilities

Assets may be listed based on how quickly they can be converted into cash which is called the order of liquidity. In other words, they’re ranked. The asset most easily converted into cash is listed first followed by the next easiest and so on. Of course since cash is already cash it’s the first asset…...

Effect of Transactions on the Balance Sheet

Every transaction affects two accounts or items. One account is always debited and the other account credited. This means that a balance is always maintained in the records. This is also reflected in the Balance Sheet where every transaction may affect two items, and a balance is always maintained. Illustration of how transactions affect the…...

Balance Sheet Equation

There are three main sections of a Balance Sheet: Assets, Liabilities, and Capital just like the accounting equation. The balance sheet is derived from our accounting equation and is a formal representation of our equation. Items are listed in the Balance Sheet just as in the accounting equation: Assets = Liabilities + Capital Assets are normally…...

Balance Sheet Headings

Fixed Assets These are items bought in the business not for resale but to be used over a period of several years. These assets are of a long term nature. Examples of Fixed Assets would include machinery, building and furniture. Current Assets These are items in the business which are used up and change daily…...

Definition & Purpose of Balance Sheet

The Balance Sheet is a statement of financial position of a business at a specific point in time usually at the end of the month or year. By analyzing and reviewing this financial statement the current financial “health” of a business can be determined. The Balance Sheet sums up the economic resources (assets), obligations (debts…...

Assets, Liabilities & Capital

Assets Assets are things that a company owns and are sometimes referred to as the resources of the company. The properties used in the operation or investment activities of a business. Assets include tangible and intangible items. Tangible items can be physically seen and touched such as vehicles, equipment and buildings. Intangible items are like…...