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Friday, 19 September 2014

Balance Sheet

Balance Sheet (also called Statement of Financial Position) consists of three things:
     1 ASSET : Total valuable things that company owned
     2 LIABILITY : Money borrowed from debtors
     3 EQUITY: Money received from shareholders and previous years earnings

The relationship between these three things are:

ASSET= LIABILITY+ EQUITY

*A company use the money borrowed from creditors (LIABILITY) and money received from shareholders and previous years earnings(EQUITY) to buy valuable things (ASSET)

ASSET can be further divided into 2 parts:
    1 NON-CURRENT ASSET : Asset that can not be turned into money within one year
    2 CURRENT ASSET : Asset that can be turned into money within one year

LIABILITY can be further divided into 2 parts:
    1 NON-CURRENT LIABILITY : Liability that must be paid off to debtors in more than one year
    2 CURRENT LIABILITY : Liability that must be paid off to debtors within one year.


Balance Sheet Template



Furher Info: 
"Asset"
"Liability"
"Equity" 

3 comments:

  1. Hi,

    Would like to understand when reading annual financial report, there are Company and Group info.
    Which one we should refer to and why?
    Appreciate your explanations.

    Thanks.

    ReplyDelete
  2. hi i wish to know the answer also thx ^^

    ReplyDelete
  3. Basically we refer to Group..Group includes all the subsidiaries of the company into one.. For example company A owns subsidiary B and subsidiary C. Revenue of group = Revenue A+ Revenue B+ Revenue C.. Whereas Revenue Company = Revenue A only

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