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Chapter 4 Balance Sheet
Introduction
A balance sheet also known as the statement of financial position tells about the assets, liabilities and equity of a business at a specific point of time. equity of a business at a specific point of time It is a snapshot of a business. A balance sheet is an extended form of the accounting equation. An accounting equation is: Assets Liabilities + Equity Assets = Liabilities + Equity
Assets are the resources controlled by a business, equity is the obligation of the company to its owners and liabilities are the obligations of parties other than owners. A balance sheet is named so because it lists all resources owned by the company and shows that it is equal to the sum of all liabilities and the equity balance.
Forms of Balance Sheet
An account form balance sheet is just like a T‐account listing assets on the debit side and equity and liabilities on the right hand side. liabilities on the right hand side A report form balance sheet lists assets followed by liabilities and equity in vertical format. liabilities and equity in vertical format
ASSETS
Assets are things that the company owns. They are the resources of the company that have been acquired through transactions, and have future i d h h i d h f economic value that can be measured and expressed in dollars. dollars Assets also include costs paid in advance that have not y yet expired, such as prepaid advertising, prepaid p p p g p p insurance, prepaid legal fees, and prepaid rent.
Examples of asset accounts that are reported on a company's balance sheet include:
Cash Petty Cash Temporary Investments Accounts Receivable A t R i bl Inventory Supplies Prepaid Insurance Land Land Improvements Buildings Equipment Goodwill Usually these asset accounts will have debit balances.
Contra assets are asset accounts with credit balances. (A credit balance in an asset account is contrary—or contra—to an asset account s
Introduction
A balance sheet also known as the statement of financial position tells about the assets, liabilities and equity of a business at a specific point of time. equity of a business at a specific point of time It is a snapshot of a business. A balance sheet is an extended form of the accounting equation. An accounting equation is: Assets Liabilities + Equity Assets = Liabilities + Equity
Assets are the resources controlled by a business, equity is the obligation of the company to its owners and liabilities are the obligations of parties other than owners. A balance sheet is named so because it lists all resources owned by the company and shows that it is equal to the sum of all liabilities and the equity balance.
Forms of Balance Sheet
An account form balance sheet is just like a T‐account listing assets on the debit side and equity and liabilities on the right hand side. liabilities on the right hand side A report form balance sheet lists assets followed by liabilities and equity in vertical format. liabilities and equity in vertical format
ASSETS
Assets are things that the company owns. They are the resources of the company that have been acquired through transactions, and have future i d h h i d h f economic value that can be measured and expressed in dollars. dollars Assets also include costs paid in advance that have not y yet expired, such as prepaid advertising, prepaid p p p g p p insurance, prepaid legal fees, and prepaid rent.
Examples of asset accounts that are reported on a company's balance sheet include:
Cash Petty Cash Temporary Investments Accounts Receivable A t R i bl Inventory Supplies Prepaid Insurance Land Land Improvements Buildings Equipment Goodwill Usually these asset accounts will have debit balances.
Contra assets are asset accounts with credit balances. (A credit balance in an asset account is contrary—or contra—to an asset account s