balance sheet

The balance sheet

Shows how much money a company has. How much it owes, how much it belongs to its employees and how much it belongs to owners

Another way of looking at a balance sheet

Is that it is a Snapchat of a company's finances at a certain point in time

The accounting equation states that

All of a business's assets come from either liabilities which is borrowing or owner's equity investment

The balance sheet is very complex and

Has many factors like accounting that the cash flow statement doesn't contain

Banks and vendors determine

Credit worthiness

Assets may be

Tangible or intangible

Fixed assets

Take longer to convert into cash

All assets depreciate over time

With the exception of land

Liabilities or claims that

Creditors have against a businesses assets

Accounts receivable are an example

Of money gained or kept

Owners equity is sometimes called

Book value

Book value in fair market are

Completely separate, book value is like overall income market value is the actual business value

Negative owners equity can be a sign

That a business is in financial trouble

The note section of the balance sheet contains

Additional relevant information

The footnotes of the balance sheet contain

Extra information that is usually long