Explanation of the Topic...Balance Sheet
|
Featured Testimonial (View All)"I think the AccountingCoach site is an extraordinary resource, especially for those of us who are just starting out in the accounting field. The information provided is very clear and comprehensive..." – B. |
| Part 1 | Introduction to the Balance Sheet, Assets |
| Part 2 | Liabilities |
| Part 3 | Owner's (Stockholders') Equity |
| Part 4 | Sample Balance Sheet, Notes To Financial Statements, Financial Ratios |
Most accounting balance sheets classify a company's assets and liabilities into distinctive groupings such as Current Assets; Property, Plant, and Equipment; Current Liabilities; etc. These classifications make the balance sheet more useful. The following sample balance sheet is a classified balance sheet.
Sample Balance Sheet:
Balance Sheet December 31, 2006
The notes to the sample balance sheet have been omitted. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The notes (or footnotes) to the balance sheet and to the other financial statements are considered to be part of the financial statements. The notes inform the readers about such things as significant accounting policies, commitments made by the company, and potential liabilities and potential losses. The notes contain information that is critical to properly understanding and analyzing a company's financial statements.
It is common for the notes to the financial statements to be 10-20 pages in length. Go to the website for a company whose stock is publicly traded and locate its annual report. Review the notes near the end of the annual report.
A number of important financial ratios and statistics are generated by using amounts that are taken from the balance sheet. For an illustration of some of these computations see our Explanation of Financial Ratios.
Because the material covered here is considered an introduction to the topic of balance sheet, there are many complexities not presented. You should always consult with an accounting professional for assistance with your own specific circumstances.
|
![]() Now you can highlight, make notes, and study away
|
Where Do I Go Next?
![]() | Interactive Drills for Balance Sheet |
![]() | Crossword Puzzles for Balance Sheet |
![]() | Word Scramble for Balance Sheet |
