What a company owns and owes at one time.
A snapshot of its financial situation.
What Balance Sheets Show
Company’s Assets + Company’s Liabilities = Owner’s equity
What Are Assets?
Company’s belongings that have future economic value in dollars:
- Accounts Receivable
- Patents, Copyrights, Trademarks
What Are Liabilities?
Things that the company owes to other parties:
- Accounts Payable
- Salaries Payable
- Customer Deposits
- Bonds Payable
- Tax Payments
- Warranty Payments
What is Owner’s Equity
The source of the company’s assets.
Assets – Liabilities = Owner’s Equity
The money you would have left over if you sold your company:
- Paid-in Capital
- Retained Earnings
Bankers can use to figure out if a business is on the right track for loans or credit.
A balance sheet reveals a company or person’s net worth.
Assets – Liabilities = Net Worth
The Person with the highest net worth in the world is Bill Gates, over $79 Billion, enough to buy every home in Boston.