part 2 (1/2)

Question 1

What is the balance sheet?

Answer 1

The balance sheet is the part of the annual report that provides what the company owns (assets) and what they owes (liabilities) in a particular moment of time.

Question 2

Define assets?

Answer 2

Assets are all the “things” a company owns- properties, belongings and other rights.

Question 3

Define liabilities?

Answer 3

Liabilities are a list of all the financial resources that a company has used to cover the cost fo the assets. It is what the company owes (capital and debts).

Question 4

What is included in the liabilities?

Answer 4

The share capital (funds provided by owners) and all other possible sources of funds (debts to banks or other financial institutions).

Question 5

What is internal and external liabilities?

Answer 5

Internal liabilities are fundings coming from owners. External liabilities are fundings coming from third parties, such as banks.

Question 6

Explain how the balance sheet often is explained as a “picture” and “snapshot”.

Answer 6

This, since the balance sheet is a static presentation of the company. It provides information for a specific moment of time, in difference from the income statement that provides a more dynamic span of information collected.