The Balance Sheet<\/b> tells to investors how much money an institution or company has (assets), how much it owes (liabilities), and what is left when you net the two together (book value, net worth, or shareholder equity).<\/span><\/p>\n The Income Statement<\/b> is a record of the company\u2019s profitability. The Income Statement tells you how much money a corporation made or lost.<\/span><\/p>\n The Cash Flow Statement<\/b> is a record of the actual changes in cash it shows you where the cash was brought in and where the cash was disbursed, compared to the income statement.<\/span>\u00a0<\/b><\/p>\n A balance sheet shows the financial position of the corporation at the end of every period. It provides information about nature and amounts of investments in enterprise resources, the owner\u2019s equity in net resources and obligations to creditors.<\/span><\/p>\n 1- Assets:<\/b> probable future economic benefits controlled or obtained by a specific entity as results of past events or transactions.<\/span><\/p>\n 2- Liabilities:<\/b> probable future sacrifices of economic benefits arising from present obligations of a\u00a0 particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.<\/span><\/p>\n 3-<\/span> Equity:<\/b> Residual interest in the assets of an entity that remains after deducting its liabilities.\u00a0 In a business enterprise, equity is the ownership interest.<\/span><\/p>\n \u00a0<\/b><\/p>\n These elements are then divided into several sub classifications, so the general format of balance sheet as presentation below:<\/b><\/p>\n \u00a0<\/span><\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span>Assets<\/b> \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 <\/span>Liabilities and owner\u2019s equity<\/b><\/p>\n \u00a0<\/span><\/p>\n The first column lists the category of assets and liabilities, and one lists the total amount for each of those categories. It may even have two years\u2019 worth of information. Oftentimes, assets are listed in order of how quickly they will be converted into cash and liabilities are listed in order of their due dates.<\/span>\u00a0<\/span><\/i><\/p>\n A balance sheet is composed of rows and columns that list a company\u2019s assets and liabilities, and money owned by shareholders<\/i><\/b><\/p>\n Example: Present below data of Company\u2019s balance sheet<\/b><\/p>\n The Classified Balance Sheet<\/span><\/p>\n \u00a0<\/span><\/td>\n ***<\/span><\/td>\n outstanding*** shares<\/span><\/td>\n<\/tr>\n \u00a0<\/span><\/td>\n ***<\/span><\/td>\n outstanding*** shares<\/span><\/td>\n<\/tr>\nDefined and usefulness of the balance sheet<\/b><\/h3>\n
![\"balance](\"https:\/\/matixerp.com\/wp-content\/uploads\/2024\/02\/Role-of-the-Balance-Sheet-3.jpg\")
<\/p>\nElements of the balance sheet<\/b><\/h3>\n
\n
\n\n
\n Current assets<\/span><\/td>\n Current liabilities<\/span><\/td>\n<\/tr>\n \n Long- term investments<\/span><\/td>\n Long- term debt<\/span><\/td>\n<\/tr>\n \n \u00a0 Property, plant, and equipment<\/span><\/td>\n Owner\u2019s equity<\/span><\/td>\n<\/tr>\n \n Intangible assets<\/span><\/td>\n Capital stock<\/span><\/td>\n<\/tr>\n \n Other assets<\/span><\/td>\n Additional paid in capital<\/span><\/td>\n<\/tr>\n \n <\/td>\n \u00a0 Retained earnings<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n How to Read a Balance Sheet<\/b><\/h4>\n
\n\n
\n The Balance Sheet as of December31, 201?<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Assets<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Current assets<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Cash<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Bank<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n ***<\/span><\/td>\n \u00a0 Account receivable<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n (***)<\/span><\/td>\n \u00a0 Less: allowance for doubtful accounts<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Notes receivable<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Inventories<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Prepaid expenses<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n <\/td>\n \u00a0 Total current assets<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Long- term investments<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Long- term securities<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Long- term receivable<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n <\/td>\n \u00a0 Total long-term investments<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Property, plant, and equipment<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Land<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n ***<\/span><\/td>\n \u00a0 Building<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n (***)<\/span><\/td>\n \u00a0 Less: accumulated depreciation<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n ***<\/span><\/td>\n \u00a0 Machinery and equipment<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n (***)<\/span><\/td>\n \u00a0 Less: accumulated depreciation<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n \u00a0<\/span><\/td>\n \u00a0 Total Property, plant, and equipment<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Intangible assets<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Goodwill<\/span><\/td>\n<\/tr>\n \n \u00a0<\/span><\/td>\n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n \u00a0 Trademark<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n \u00a0<\/span><\/td>\n \u00a0 Total Intangible assets<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n <\/td>\n <\/td>\n \u00a0 \u00a0 <\/span> Total assets<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Liabilities and stockholder\u2019s equity<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Current liabilities<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Notes payable<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Account payable<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Accrued interest on notes payable<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Accrued salaries, wages and other liabilities<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Income tax payable<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n <\/td>\n \u00a0 Total current liabilities<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Long- term debt<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Bond payable due after 5 year<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Mortgages and other notes due after 12 year<\/span><\/td>\n<\/tr>\n \n <\/td>\n ***<\/span><\/td>\n <\/td>\n \u00a0 Debentures due after 15 year<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n <\/td>\n \u00a0 Total long- term debt<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Stockholder\u2019s equity<\/span><\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n Capital stock:<\/span><\/td>\n<\/tr>\n \n <\/td>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0 Preferred ** par value, issued and<\/span><\/p>\n \n <\/td>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Common ** par value, issued and<\/span><\/p>\n \n <\/td>\n ***<\/span><\/td>\n ***<\/span><\/td>\n Additional paid in capital<\/span><\/td>\n<\/tr>\n \n \u00a0<\/span><\/td>\n ***<\/span><\/td>\n <\/td>\n Retained earnings<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n \u00a0<\/span><\/td>\n <\/td>\n \u00a0 Total stockholder\u2019s equity<\/span><\/td>\n<\/tr>\n \n ***<\/span><\/td>\n <\/td>\n <\/td>\n \u00a0 <\/span> Total Liabilities and stockholder\u2019s equity<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Why Is The Balance Sheet Important?<\/b><\/h5>\n
![\"balance](\"https:\/\/matixerp.com\/wp-content\/uploads\/2024\/02\/Role-of-the-Balance-Sheet-2.jpg\")
<\/p>\n