Balance Sheet - Wikipedia, The Free Encyclopedia

6/15/2014 Balance sheet - Wikipedia, the free encyclopedia 1/8 Types Search Wikipedia Last edited 1 day ago by Kuru Balance sheet In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership, a corporation or other business organization, such as an LLC or an LLP. Assets, liabilities and ownership equity are listed as of a specific date, such as the
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  6/15/2014Balance sheet - Wikipedia, the free encyclopedia Types Search Wikipedia Last edited 1 day ago by Kuru Balance sheet In financial accounting, a balance sheet  or statement of financial position  is a summary of the financial balances of a sole proprietorship, a business partnership, a corporation or other  business organization, such as an LLC or an LLP.  Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year . A balance sheet is oftendescribed as a snapshot of a company's financial condition . [1]  Of the three basic financialstatements, the balance sheet is the only statement which applies to a single point in time of abusiness' calendar year. A standard company balance sheet has three parts: assets, liabilities and ownership equity.The main categories of assets are usually listed first, and typically in order of liquidity. [2]  Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. [3]  Another way to look at the balance sheet equation is that total assets equals liabilities plusowner's equity. Looking at the equation in this way shows how assets were financed: either byborrowing money (liability) or by using the owner's money (owner's or shareholders' equity).Balance sheets are usually presented with assets in one section and liabilities and net worthin the other section with the two sections balancing . A business operating entirely in cash can measure its profits by withdrawing the entire bankbalance at the end of the period, plus any cash in hand. However, many businesses are notpaid immediately; they build up inventories of goods and they acquire buildings and equipment. In other words: businesses have assets and so they cannot, even if they want to, immediately turn these into cash at the end of each period. Often, these businesses owemoney to suppliers and to tax authorities, and the proprietors do not withdraw all their originalcapital and profits at the end of each period. In other words businesses also have liabilities. Contents  6/15/2014Balance sheet - Wikipedia, the free encyclopedia Personal balance sheetUS small business balance sheetPublic Business Entities balance sheet structure AssetsLiabilitiesEquityBalance sheet substantiationSample balance sheetSee alsoReferences  A balance sheet summarizes an organization or individual's assets, equity and liabilities at aspecific point in time. Two forms of balance sheet exist. They are the report form and theaccount form. Individuals and small businesses tend to have simple balance sheets. [4]  Larger businesses tend to have more complex balance sheets, and these are presented in theorganization's annual report. [5]  Large businesses also may prepare balance sheets for segments of their businesses. [6]  A balance sheet is often presented alongside one for adifferent point in time (typically the previous year) for comparison. [7][8] Personal balance sheet  A personal balance sheet lists current assets such as cash in checking accounts and savings accounts, long-term assets such as common stock and real estate, current liabilities such as loan debt and mortgage debt due, or overdue, long-term liabilities such as mortgage and other loan debt. Securities and real estate values are listed at market value rather than athistorical cost or cost basis. Personal net worth is the difference between an individual's total assets and total liabilities. [9] US small business balance sheet Sample Small Business Balance Sheet [10] AssetsLiabilities and Owners' Equity Cash$6,600 Liabilities Types  6/15/2014Balance sheet - Wikipedia, the free encyclopedia  Accounts Receivable$6,200Notes Payable$5,000Tools and equipment$25,000Accounts Payable $25,000 Total liabilities $30,000 Owners' equity Capital Stock$7,000Retained Earnings$800 Total owners' equity  $7,800 Total  $37,800 Total  $37,800 A small business balance sheet lists current assets such as cash, accounts receivable, andinventory, fixed assets such as land, buildings, and equipment, intangible assets such as patents, and liabilities such as accounts payable, accrued expenses, and long-term debt. Contingent liabilities such as warranties are noted in the footnotes to the balance sheet. The small business's equity is the difference between total assets and total liabilities. [11] Guidelines for balance sheets of public business entities are given by the International Accounting Standards Board and numerous country-specific organizations/companys. Thestandard used by companies in the USA adhere to U.S. Generally Accepted AccountingPrinciples (GAAP). The Federal Accounting Standards Advisory Board (FASAB) is a United States federal advisory committee whose mission is to develop generally acceptedaccounting principles (GAAP) for federal financial reporting entities.Balance sheet account names and usage depend on the organization's country and the typeof organization. Government organizations do not generally follow standards established for individuals or businesses. [12][13][14][15] If applicable to the business, summary values for the following items should be included in thebalance sheet: [16]  Assets are all the things the business owns, this will include property, tools,cars, desks, chairs etc.  Assets Current assets Public Business Entities balance sheet structure  6/15/2014Balance sheet - Wikipedia, the free encyclopedia 1. Cash and cash equivalents2.  Accounts receivable3. Prepaid expenses for future services that will be used within a year Non-current assets (Fixed assets) 1. Property, plant and equipment2. Investment property, such as real estate held for investment purposes3. Intangible assets4. Financial assets (excluding investments accounted for using the equity method, accountsreceivables, and cash and cash equivalents) 5. Investments accounted for using the equity method 6. Biological assets, which are living plants or animals. Bearer biological assets are plants or animals which bear agricultural produce for harvest, such as apple trees grown to produceapples and sheep raised to produce wool. [17] Liabilities See Liability (accounting)1.  Accounts payable2. Provisions for warranties or court decisions3. Financial liabilities (excluding provisions and accounts payable), such as promissory notesand corporate bonds4. Liabilities and assets for current tax5. Deferred tax liabilities and deferred tax assets6. Unearned revenue for services paid for by customers but not yet provided Equity  The net assets shown by the balance sheet equals the third part of the balance sheet, which isknown as the shareholders' equity. It comprises::1. Issued capital and reserves attributable to equity holders of the parent company (controlling interest)2. Non-controlling interest in equityFormally, shareholders' equity is part of the company's liabilities: they are funds owing toshareholders (after payment of all other liabilities); usually, however, liabilities is used in themore restrictive sense of liabilities excluding shareholders' equity. The balance of assets andliabilities (including shareholders' equity) is not a coincidence. Records of the values of eachaccount in the balance sheet are maintained using a system of accounting known as double-
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