Financial-Balance Sheet Part 1 Flashcards
What is Balance Sheet?
Gives a picture of the company’s financial position at a given date and represents how much the company is worth. List of all assets.
Assets = Liabilities + Owner’s (Stockholder’s) Equity
Tell us how efficiently a company is utilizing its assets, and how well it is managing its liabilities in pursuit of profits.
What is the balance sheet equation/components?
Assets = Liabilities + Owner’s (Stockholder’s) Equity
What and where other financial transactions are summed?
On Balance sheet.
Other financial transaction can be
All of the debits, credits, cash flows, sales, expenses.
Explain Assets
There are items of economic value owned by the company which can produce future economic benefits and converted to cash.
How do Assets divides?
Current Assets
- Cash
- Accounts Receivable
- Inventory
- Prepay expenses
Fixable Assets
- Property
- Plant
- Equipment
- Other assets and investments
- Goodwill
Explain Liabilities
Liabilities are the present obligations of a company arising from past events, the settlement of which is expected to result in an outflow of the company’s resources.
(All the company debt.)
How do Liabilities divides?
Current Liabilities
- Accounts Payable (AP)
- Notes Payable
- Taxes Payable
- Short term debt
Long term Liabilities
- Long term debt
- Long term liabilities
Explain Owner’s Equity
Residual claim by owners of the company (shareholders)
What is Liquidity?
This is how fast an asset can be converted into cash
How the Assets on the balance sheet are ordered?
On the balance sheet the assets are always ordered in most liquid to least liquid.
