Finances Flashcards
How does a balance sheet form?
It takes this form: Assets – Liabilities = Owner’s Equity
What is a balance sheet?
A business keeps track of its assets, liabilities, and equity through a financial statement called a balance sheet.
What are assets?
are things owned or held by a business that have monetary value. Cash, securities—such as stocks and bonds—real estate, company vehicles, and office and plant equipment are assets.
What are liabilities?
are what the business owes to banks or others on loans, plus the total amount owed to creditors.
What is equity?
is what the business actually owns, in part or in whole. If Ace Tool and Die has paid 50 percent of what was owed on its machine lathes, it now has 50 percent equity in that equipment.
What is often called a profit and loss statement?
An income statement
Income – Expenses =
Profit or Loss
