Balance Sheet

Definition:

• Content: financial position (amount of assets, liabilities, and stockholders’ equity) of an accounting entity at a particular point in time.
• Consolidated balance sheet: overall balance sheet of a corp. with all its companies
• Heading:
  1. Name of the entity
  2. Title of the statement, Balance Sheet.
  3. Specific date of the statement
  4. Unit of measure (in millions of dollars).
• 
• Dividend is dividend payable as liability

Basic Accounting Equation

RE_cb = RE_ob + Net Income - Dividend

Asset:

• Measured at the total cost incurred to acquire it, not generally show the amounts for which the assets could currently be sold.
• Assets are: current vs non-current assset, listed from most liquid to least liquid
• Includes:
  • Cash: amount of cash in the company’s bank accounts
  • Account receivable: Amounts owed by customers from prior sales
  • Inventories and supplies:
    • supplies use in short time, not for sale, in order to facilitate production
    • raw material, work in process (semi finish), final product
  • Non-current asset: purchased to use for >= 12 months, usually big purchases
    • Property, land and equipment
  • Prepaid expenses: rent, insurance, subscriptions,..

Liabilities:

• Indicate the amount of financing provided by creditors
• Current and non-current liabilities.
• Includes:
  • Account payable: Amounts owed to suppliers for prior purchases
  • Notes payable to banks: owed to banks on written debt contract

Stockholder’s Equity:

• Indicates the amount of financing provided by owners of the business and reinvested earnings
• Includes:
  • Common stock: Amounts invested in the business by stockholders
  • Retained earnings: Past earnings not distributed to stockholders (no dividend)
    • amount of earnings (profits) reinvested in the business
  • Addtional paid-in capitals