Explanation of the Topic...
|Part 1||Introduction to Balance Sheet, Assets|
|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 balance sheet example is a classified balance sheet.
Sample Balance Sheet:
December 31, 2011
The notes to the sample balance sheet have been omitted.
Whether you are a business person or student of business, our Master Set of 87 Business Forms will assist you in preparing financial statements, financial ratios, break-even calculations, depreciation, standard cost variances, and much, much more.
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 this topic, many complexities have been omitted. You should always consult with an accounting professional for assistance with your own specific circumstances.
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