2.2 The Balance Sheet

Question 1

1. What is a balance sheet and why is it often called a “snapshot of your business”?

Answer 1

The balance sheet is a financial statement which reports the totsl assets, liabilities and owner’s equity for a business on a specific date. It is called a snapshot because it gives a picture of what a business looks like on a given day.

Question 2

What is the difference between accounts receivable and accounts payable? On which side of the balance sheet does each occur?

Answer 2

Accounts receivable are the debts owed to a business by its customers. Accounts payable are the debts owed by a business to its suppliers and others.

Receivable on the left, payable on the right.