Balance Sheet

Learn about the structure and contents of a balance sheet by examining one for the fictitious company Bogus Manufacturing, Inc.

Click the “To Learn More” button to access the interactive financial statement, where you can mouse over different terms and sections to learn what they are.

Click the “Statement” button to return to the nicely formatted balance sheet.

Click the “Print” button to get a printout of the nicely formatted balance sheet.

The Assets section of the balance sheet shows what the company owns, usually listed in order of liquidity, starting with cash and near-cash current (liquid) assets, inventory, accounts receivable, and other current assets. Fixed or capital assets that would not normally be liquidated within a year are listed after current assets. Groups may be subtotalled. Many values used in calculating asset management ratios come from this section.

Liabilities show the obligations of the firm, starting with those due soonest (current liabilities) and continuing to long-term liabilities. Anything due within one year is considered current.

The Equity section, or Owners’ Equity section includes capital contributions by owners and an accumulation of all profits not yet distributed. This section balances the difference between assets and liabilities, and hence the name Balance Sheet. This is the residual that would be left for owners after liabilities are satisfied.

The basic formula for a balance sheet is:

Assets = Liabilities + Owners’ Equity

Get More Help!

Click one of these links to get more help from another Cramlet in this same chapter:

• Overview of Financial Statements
• Cash Flow: Quiz
• Balance Sheet: Quiz
• Cash Flow
• Retained Earnings
• Income Statement, Single Step
• Income Statement, Multi-Step
• Balance Sheet