What Is a Balance Sheet?
The balance sheet provides a snapshot of the financial condition of an organization at a specific point in time. It reports what the company owns (assets), what it owes (liabilities) and what the owners' stake in the business is worth (shareholders' equity). The basic accounting equation for a balance sheet is Assets = Liabilities + Owner's Equity. The balance sheet lists assets, liabilities and shareholders' equity in the order of their expected liquidity, starting with current assets and then moving to long-term assets. A company's current assets can be converted into cash within a year, and include accounts receivable and inventory. Long-term assets are those that will require more than a year to convert into cash and would include things like property and equipment, intangibles such as intellectual property, and other durable fixed assets. Contra-asset object codes are listed separately, with their debit balances decreasing the corresponding asset code's credit balance.
The liabilities section of a balance sheet includes amounts that the company owes to others, such as debt and operating expenses. It also includes unpaid income taxes, and the value of any current or future pension commitments. A separate section of the balance sheet is reserved for long-term debt, which would include any loan obligations due in more than a year, along with the principal and interest on corporate bonds. The last section of the balance sheet, Shareholders' Equity, includes common stock value, retained earnings and accumulated other comprehensive income.Bilanz