16 Jan, 2017
...Understanding the Balance Sheet
...Liabilities are also divided in to two parts. Current and long term; current liabilities are the obligations that mature within a year, and long term ones mature after one year.
Owner's equity can be created from two sources: owner's investment and the retained earnings that is affected by a profit or a loss that company makes as a result of business operations.
Transactions that affect the balance sheet can be summarized as follows: if a company purchases a new truck by making a cash down payment and the rest is financed, than current assets decrease by the down payment amount, long term assets increase by the total purchase price of the truck and the long term liabilities increase by the amount financed. The key to understanding the balance sheet equation is that, assets and liabilities and owner's equity totals increase equally.
This is just a short summary of a basic idea behind the balance sheet. Debates continue on the basic concepts of financial reporting; on how to make accounting reporting more ethical and reduce possibility of an accounting fraud.
We hope that you learned more about the balance sheet and now are able to understand one when you will look at it. Learning these principles will be beneficial to anyone who is a small business owner or plans to own one in the future.
41 Comments
direk
ReplyI want to convey my respect for your generosity in support of women who should have guidance on this important field. Austin Swen Popele
access
ReplyI needed to thank you for this fantastic read!! I definitely loved every little bit of it. I have got you bookmarked to check out new things you post? Mattie Gerardo Jewelle
yabanci
ReplyMy family every time say that I am killing my time here at net, except I know I am getting knowledge daily by reading thes nice content.| Jo Royce Orvan
movies
ReplyHeya i am for the primary time here. I came across this board and I find It truly useful & it helped me out much. I am hoping to present something back and help others like you aided me. Lonee Melvyn Quent
online
ReplyOur team are will rapidly and successfully make a guarantee High-end remodelling New York. Cordelia Brody Rainer