Basic Financial Statements
Self-Paced Overview
The Balance Sheet
The Balance Sheet – Balancing
The balance sheet must balance; that's why it's called a balance sheet. In other words, the assets must equal the claims on assets. The concept of balancing relies on the accounting equation which was discussed earlier in this lesson.
Assets = Liabilities + Owners' Equity
Balance Sheet
Products, Inc.
January 1, 2012
| Assets | ||
|---|---|---|
| Current Assets | ||
| Cash | $123,000 | |
| Marketable Securities | $200,000 | |
| Accounts Receivable | $345,000 | |
| Inventories | $100,000 | |
| Total Current Assets | $768,000 | |
| Long-Term Assets | ||
| Building (Gross) | $350,000 | |
| −Accumulated Depreciation | $–50,000 | |
| Net Building | $300,000 | |
| Land | $325,000 | |
| Total Long-Term Assets | $625,000 | |
| Total Assets | $1,393,000 | |
| Claims on Assets | ||
|---|---|---|
| Current Liabilities | ||
| Accounts Payable | $100,000 | |
| Notes Payable | $150,000 | |
| Total Current Liabilities | $250,000 | |
| Long-Term Notes | $300,000 | |
| Total Liabilities | $550,000 | |
| Owners' Equity | $843,000 | |
| Total Claims | $1,393,000 | |