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Balance Sheet Acctng

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23 views2 pages

Balance Sheet Acctng

Uploaded by

Cienna Gracia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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A balance sheet is one of the key financial statements in accounting that provides a snapshot of

a company’s financial position at a specific point in time. It shows the company’s assets,
liabilities, and equity, adhering to the fundamental accounting equation:

Assets = Liabilities + Equity

Components of a Balance Sheet

1. Assets
Assets represent resources owned by the company that provide economic value. They
are typically divided into two categories:

o Current Assets: Expected to be converted into cash or used up within a year


(e.g., cash, accounts receivable, inventory).

o Non-Current Assets: Long-term investments or resources (e.g., property,


equipment, intangible assets).

2. Liabilities
Liabilities are obligations or debts the company owes to outside parties. They are also
divided into:

o Current Liabilities: Due within one year (e.g., accounts payable, short-term
loans).

o Non-Current Liabilities: Long-term obligations (e.g., bonds payable, long-term


loans).

3. Equity
Equity represents the residual interest in the company’s assets after deducting liabilities.
Common components include:

o Common Stock: Capital contributed by shareholders.

o Retained Earnings: Profits retained for reinvestment or other purposes.

o Additional Paid-in Capital: Amount paid by shareholders over the par value of
shares.

Example of a Balance Sheet Format

Here’s a basic layout of a balance sheet:

Assets Amount Liabilities and Equity Amount

Current Assets Current Liabilities


Assets Amount Liabilities and Equity Amount

- Cash $X,XXX - Accounts Payable $X,XXX

- Accounts Receivable $X,XXX - Short-term Loans $X,XXX

- Inventory $X,XXX Total Current Liabilities $X,XXX

Total Current Assets $X,XXX

Non-Current Assets Non-Current Liabilities

- Property, Plant, and Equipment $X,XXX - Long-term Debt $X,XXX

- Intangible Assets $X,XXX Total Non-Current Liabilities $X,XXX

Total Non-Current Assets $X,XXX

Total Assets $X,XXX Equity

- Common Stock $X,XXX

- Retained Earnings $X,XXX

Total Equity $X,XXX

Total Liabilities and Equity $X,XXX

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