Balance Sheet, Accounting Equation

Financial statements report the state of financial affairs of an enterprise. They Provide information to owners and creditors about the firm’s current status and past financial performance.  There are three key statements: Income statement, statement of the cash flow and balance sheet.  This lesson will introduce the balance sheet, a representation of a firm's financial position at a single point in time.

The balance sheet is one of the four major financial statements. You will be able to identify assets, liability, and shareholder's equity, and learn how to compute the balance sheet equation. You will also be able to create a balance sheet.

In this course, we will provide an overview of the financial statements and explain in details the balance sheet statement.

In this course you will learn:

• Identify balance sheet elements: assets, liabilities and owners equity

• Classify accounts that qualify as equity

• Understand how to use the accounting equation to prepare and create a balance sheet with all its components.

• Note the types of assets that can be classified into each of the major asset categories.

• Recognize the different types of liabilities that may appear on the balance sheet.

• Describe the proper presentation of each equity line item on the balance sheet.

• Describe the structure of the statement of retained earnings.