Key Rules Balance Sheet

Question 1

Balance sheet shows

Answer 1

Company’s resources - assets + how it acquired these resources - liabilities and equity.

At a specific point in time

Question 2

Equity =

Answer 2

Assets - liabilities

Question 3

50k in stock, 30k in cash, 500k in house. Mortgage 380k

Answer 3

Assets = 500 + 50 + 30 = 580k
Liabilities = 380k
Equity = 200k in saved up after tax job earnings

Question 4

Key Balance Sheet rules:

Answer 4

1. Assets = liabilities + equities
2. Asset will result in cash
3. Liability will result in less cash
4. Equity refer to company’s own internal operations rather than external parties

Question 5

Current assets vs long term assets

Answer 5

• lasts under 1 year, lasts more than 1 year.