Nature and Purpose of the Balance sheet Flashcards

1
Q

What is a balance sheet?

A

a financial statement that details the entity’s assets, liabilities and equity at a particular point in time

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2
Q

What does a Balance Sheet show?

A

○ The Assets

○ The liabilities

○ The equity

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3
Q

Asset

A

What the entity owns (or controls) at a particular date

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4
Q

Liabilities

A

The external claims on the entity’s assets

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5
Q

The Equity

A

The internal claim on the entity’s assets

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6
Q

Purpose of Balance Sheet

A

Allows users to make a preliminary assessment as to the financial position of the entity

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