Balance sheet

Balance sheets

One of the most important forms used in business finance, used to determine a businesses financial position (may also be called statement of financial position)

Serves as a snapshot, providing a comprehensive picture of an organizations financial situation. Reports on assets and liabilities as well as net worth

Net worth formula

Assets - Liabilities = Owners equity (net worth)

Liquidity

The order in which assets can be easily turned into cash (revenue is listed in order of liquidity)

Accounts receivable

list of customers who purchased goods or services and will pay at a later date (in debt to the business and known as a debtor) - listed after cash and names are listed in alphabetical order by last name (A/R)

Accounts payable

List of suppliers who the company purchased goods or services from but will pay at a later date (amount owed to creditors where a creditor is anyone they owe money to). Also listed alphabetically and listed first in liabilities

Owners equity

Listed separately, under liabilities. Under it shows “(owners first initial + last name) capital”

The amount is total assets - total liabilities