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Basic Financial Statements

 Self-Paced Overview

The Balance Sheet

The Balance Sheet is a statement detailing what a company owns (assets) and claims against the company (liabilities and owners' equity) on a particular date. Some analysts liken the balance sheet to a snapshot illustrating a company's financial health.

Keeping in mind the assets and claims, it is helpful to remember the "left–right" accounting equation orientation; assets on the left side, claims on the right. In addition, there are a number of other characteristics of the balance sheet that are noteworthy, such as balancing, order of listing, valuing of items, and definitions of items. These items are discussed with an example balance sheet to illustrate the points.

Balance Sheet
Products, Inc.

 
January 1, 2017

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

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