Introduction to Balance Sheet
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The balance sheet (also known as the statement of financial position) reports a corporation's assets, liabilities, and stockholders' equity as of the final moment of an accounting period. For example, a balance sheet dated December 31 summarizes the balances in the appropriate general ledger accounts after all transactions up to midnight of December 31 have been accounted for.
The balance sheet is one in a set of five financial statements distributed by a U.S. corporation. To get a complete understanding of the corporation's financial position, one must study all five of the financial statements including the notes to the financial statements.
The structure of the balance sheet reflects the accounting equation: assets = liabilities + stockholders' (or owner's) equity. The use of double-entry accounting keeps the balance sheet in balance.
The amounts reported on the balance sheet are summations of the ending balances in the many asset, liability, and stockholders' equity accounts. The summarized amounts are presented in the following sections of the balance sheet:
- Current assets
- Investments
- Property, plant and equipment
- Intangible assets
- Other assets
- Current liabilities
- Noncurrent liabilities
- Stockholders' equity