balance sheet

Balance Sheet

The statement of financial position that outlines the

assets, liabilities, and equity of a firm at a specific point in time.

Balance Sheet gives the idea of what it owns and owes, including how

much shareholders have invested in it.

Key Terms related to Balance Sheet

• Assets : Resources of value that a business owns or that are owed to

it.

• Fixed Assets : Long term assets that last in a business for more than

12 months.

• Current Assets : Short term assets that last in a business for up to 12

months.

• Liabilities : A firm’s legal debts or what it owes to other firms,

institutions or individuals.

• Long term liabilities : long term debts or borrowings payable after 12

months by the business.

Assets

Resources of value that a business owns or that are owed to it.

Fixed Assets

Long term assets that last in a business for more than

Current Assets :

Short term assets that last in a business for up to 12

months.

Liabilities :

A firm’s legal debts or what it owes to other firms,

institutions or individuals.

Long term liabilities :

long term debts or borrowings payable after 12

months by the business.

Current liabilities

Current liabilities : Short term debts that are payable by the business

within 12 months.

Working Capital:

Net current assets, helps establish whether a firm

can pay its day to day running costs.

Equity

Equity : Shareholders’ fund.

Share Capital :

Capital invested into the business.

Retained Profit :

Profit that being held by the business.

Balanced sheet example

Intangible Assets :

Fixed assets that lack physical substance or are non-

physical in nature.

Example of Intangible Assets

• Patents.

• Goodwill.

• Copyright Laws.

• Trademarks.