Overview
Understanding the Balance Sheet
The balance sheet is a complete snapshot of your business's wealth. In simple terms, it works on the accounting principles of assets less liabilities = owners equity. In this training, we will explore the balance sheet's components to better understand them.
Assets
- Current Assets
- Cash and Cash Equivalents
- Accounts Receivable
- Inventory
- Prepaid Expenses
- Fixed/Long-Term Assets
- Property, Plant & Equipment
- Depreciation
- Other Assets
Liabilities
- Current Liabilities
- Accounts Payable
- Accrued Liabilities
- Short-Term Debt
- Long-Term Liabilities
- Notes Payable
- Deferred Revenue
Owner's Equity
- Retained Earnings
- Common Stock
- Additional Paid-In Capital
- Owner's Draw/Distributions
Reading the Balance Sheet
- Assets = Liabilities + Owner's Equity
- How to Analyze Financial Health
- Comparing Balance Sheets Over Time
- Common Red Flags to Watch For