The analysis and application of the balance sheet
The analysis and application of the balance sheet Kuang xin Financial accounting is one of the most popular major in the world. In the study of accounting, people must know and use expertly the three accounting statement, balance sheets, cash flow, and income statement. It is the most basic and useful skill in one’s career of accounting. But in the four basic financial statement, the balance sheet or called statement of financial position is the only one which describe a single point in time of a business’ calendar year. “In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership, a corporation or other business organization, such as an LLC or an LLP. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a snapshot of a company 's financial condition.”(Williams,Jan R,ibid,2008)Therefore, this essay will force on the balance sheet, it can help student understand the balance sheet better.
A standard company balance sheet has divide into three parts: assets, liabilities and ownership equity. “The main categories of assets are usually listed first, and typically in order of liquidity.”(Daniels, Mortimer ,1980) “Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.”[Williams, Jan R,2008]”Another way to look at the same equation is that assets equals liabilities plus owner 's equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner 's money (owner 's equity). Balance sheets are usually presented with assets in one section and
A standard company balance sheet has divide into three parts: assets, liabilities and ownership equity. “The main categories of assets are usually listed first, and typically in order of liquidity.”(Daniels, Mortimer ,1980) “Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.”[Williams, Jan R,2008]”Another way to look at the same equation is that assets equals liabilities plus owner 's equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner 's money (owner 's equity). Balance sheets are usually presented with assets in one section and