Deconstructing the Balance Sheet

What are the five key elements of a balance sheet?

• Current assets: Current assets are easily converted to cash and are often consumed. They include cash on hand, inventory, and cash in the bank.
• Fixed assets: Fixed assets are assets the company plans on keeping long term. They include buildings, equipment, vehicles, and property.
• Current liabilities: Current liabilities are debts owed during the current fiscal year. These include trade creditors and bank overdraft.
• Long-term liabilities: Long-term liabilities are debts that do not need to be settled within the next fiscal year. They include loans and mortgages.
• Shareholder's equity: Also referred as capital, shareholder's equity includes monies owed to investors and owners, as well as retained earnings.

Overview/Description

Balance sheets provide an overview of a business's financial standing. This impact explores the primary elements of a balance sheet.

Target Audience

Any individuals interested in gaining essential business finance knowledge.