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, 2017

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 is maintained by Dr. Sharon Garrison
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