Now that you have a good idea of how profits are recorded on the income statement, let's adjust those green eyeshades, insert that pocket protector, and move on to the balance sheet. As mentioned in Lesson 107, the balance sheet--also known as the "statement of financial condition"--tells investors how much a company owns (its assets), how much it owes (its liabilities), and the difference between the two (its equity) at a specific point in time. Thus, you can think of the balance sheet as a snapshot of what a company is worth--according to accounting rules--on a given day.
Although we're going to keep it fairly simple, this lesson will provide more details on the key sections of a company's balance sheet and may get a little technical at times. However, we think it will be well worth the time and effort needed to plow through it. So take a deep breath and let's dig in.
Assets, Liabilities, and Equity--It All Equals Out >>