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Balance Sheet

The financial statements are based on the accounting equation. This equation presents the assets of the business as well as the claims that investors, both debt and equity holders, have on the assets of the business. These claims are called liabilities (when the claim is from a debt holder) and owners' equity (when the claim is from an equity holder). The assets and the claims against them are presented in the Statement of Financial Position, otherwise known as the Balance Sheet. 


Assets: Assets are the resources used by the business in order to generate sales and generate profits. We say that assets are invested in. The managers of a business are responsible for choosing how to invest in assets and how to effectively use the firm's assets to drive earnings and growth. Common types of assets include:
- Cash and Cash Equivalents
- Accounts Receivable
- Inventories
- Property, Plant and Equipment

Liabilities: Liabilities represent the claims that debtholders have on the assets of the business. Managers of a business are responsible for choosing how much of the firm's assets are financed by debt. As well, interest payments on a firm's debt are fixed. Manager's must ensure that the firm generates enough income from the use of its assets to pay this interest expense each period. Common types of liabilities include:
- Accounts Payable
- Line of Credit
- Bank Loan
- Bonds, or Notes Payable

Owners' Equity (also Shareholders' Equity):  Owners' equity in a corporation is made up of two parts: contributed capital and retained earnings. Initially, shareholders will invest in a business in exchange for common shares, which represent proof of their ownership. These owners have a residual claim on the business's assets and income. When a firm earns an income, part of this income must be paid first as interest to debtholders. However, any income above and beyond is either kept as retained earnings or paid out to owners in the form of dividends. Retained earnings can be reinvested, increasing future earnings and returns for a business's owners.

(Owner's equity is not divided between contributed capital and retained earnings in a proprietorship or partnership. Owners of other forms of businesses can simply withdraw capital, rather than pay dividends).


Categories within Balance Sheet

Current Assets

Postings: 67

Current assets are short-term assets that will be converted to cash in the ordinary course of business typically within one year.

Balance Sheet from ratios

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Income statement and classified balance sheet

Using the attached data, help me to prepare an income statement and a classified balance sheet. Cru-Mart, a convenience store opened by UMHB graduates, has the following trial balance for the year ended December 31, 2013.Construct, in good form, an income statement and balance sheet, each on its own worksheet.

Lowells' Country Music Bar Balance Sheet

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Phototec, Inc: Balance Sheet

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Statement of Cash Flows, Balance Sheets

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Balance Sheet and Statement of Operations

1. View the list of account balances for Currie Hospital as of December 31, 2013. Prepare a balance sheet as of December 31, 2013, in proper form. (Hint: You will need to compute the net assets account. Assume that all net assets at the beginning of the year are unrestricted.) 2. View the list of accounts for Currie Hospital

Balance Sheets of Assets and Liabilities

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Balance Sheet and Financial Analysis

Assets Cash and cash equivalents $90 AR $175 Plant & equipment $216 $481 Liabilities AP $198 Debt $122 Declared dividends $87 $407 Owner's Equity Stock $58 Retained Earnings $16 $74 Total liabilities and owner's equity $481 Xenon is buying $24,000

Entries Balance Sheet, Statement of Revenues, Expenditures

Please help me understand this problem. This is my second time posting this. Thanks in advance for your time! The trial balance for the General Fund of the City of Monte Vista as of December 31, 2012, is presented here: (see attached workbook for values) Transactions of the General Fund for the year ended December 31, 2

Costa Company, Pickett Company,effect of the errors, profits

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Analysis of Comparative Balance Sheets

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Expected Calculations and Expected Payments

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Balance Sheet for Current Assets

BestCare HMO Balance Sheet June 30, 2007 (in thousands) Assets Current Assets Cash $2,737 Net premiums receivable 821 Supplies 387 Total current assets $3,945 Net property and equipment $5,924 Total assets $9,869 Liabilities and Net Assets Accounts payabl

Prepare Trial Balance for Willow Turenne Company

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Sherman Company: Compute a budgeted cash balance

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Balance Sheet Assistance - Kate's Interiors Exercise

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Comparing and Contrasting the Balance Sheet Treatment of a Car

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What information does a balance sheet provide?

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Prepare an income statement and balance sheet from transaction data.

Prepare an income statement and balance sheet from transaction data: a. Issued 200,000 shares of $5-par-value common stock for $1,000,000 in cash. b. Borrowed $500,000 from the Oglesby National Bank and signed a 12% note due in two years. c. Incurred and paid $380,000 in salaries for the year.

Interpret Southwest Airlines' Balance Sheet

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Analysis of ratios based on a company's balance sheet

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Balance sheet finance as financial reporting practice unethical

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Classified Balance Sheet & Statement of Stockholders' Equity

From the following information (given in scrambled order) obtained from the accounting records of Alleg, Inc., as of December 31, 2008, prepare a classified balance sheet in report form and a statement of stockholders' equity. For assets, use the classifications of current assets, plant and equipment, intangibles, and other ass

Managerial accounting: 10 multiple choice questions

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Optimal Capital Structure: Construct a pro forma balance sheet

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