Financial-Balance Sheet Part 1

Question 1

What is Balance Sheet?

Answer 1

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.

Question 2

What is the balance sheet equation/components?

Answer 2

Assets = Liabilities + Owner’s (Stockholder’s) Equity

Question 3

What and where other financial transactions are summed?

Answer 3

On Balance sheet.

Other financial transaction can be

All of the debits, credits, cash flows, sales, expenses.

Question 4

Explain Assets

Answer 4

There are items of economic value owned by the company which can produce future economic benefits and converted to cash.

Question 5

How do Assets divides?

Answer 5

Current Assets

• Cash
• Accounts Receivable
• Inventory
• Prepay expenses

Fixable Assets

• Property
• Plant
• Equipment
• Other assets and investments
• Goodwill

Question 6

Explain Liabilities

Answer 6

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.)

Question 7

How do Liabilities divides?

Answer 7

Current Liabilities

• Accounts Payable (AP)
• Notes Payable
• Taxes Payable
• Short term debt

Long term Liabilities

• Long term debt
• Long term liabilities

Question 8

Explain Owner’s Equity

Answer 8

Residual claim by owners of the company (shareholders)

Question 9

What is Liquidity?

Answer 9

This is how fast an asset can be converted into cash

Question 10

How the Assets on the balance sheet are ordered?

Answer 10

On the balance sheet the assets are always ordered in most liquid to least liquid.