What does a Balance Sheet Look Like
If you are planning to take up finance, accounting or economics course in college, you will be making use of the balance sheet a lot.
To provide you with the right idea on what a balance sheet really is, this article will help you.
Before you know what a balance sheet looks like, you need to learn first its definition. According to a reliable source, it is one of the most vital financial statements that will help you to expose what a certain entity such as an individual or company owes.
What does a Balance Sheet Look Like—Find the Answer
After knowing what a balance sheet really is, you now need to know its four main sections such as the following: heading, assets, liabilities and stockholders’ or owner’s equity. Each of these sections must be examined carefully in order for you to keep track of the financial transactions and operations as well.
In the heading section, that is where you will find the person or the company’s name who owns the balance sheet. It also indicates what the financial statement it is (balance sheet). It will also tell you the period of the information stipulated therein. In order for you to see the picture of this section and the entire balance sheet as well, you can search it on the net.
The second section you will see in the balance sheet is the assets section which is the things of value the certain entity owns. Some of the examples of these are the following: supplies, investments, equipment, building, inventory, accounts receivable and bank accounts or cash. All of these are valuable to an entity. In short, they are used by the company in making money. So, this implies that the assets are the secret weapons used by companies in order for them to continue their business operations.
Next is the liabilities or payables section. These are the unpaid financial responsibilities of a business or an individual. You owe an amount and you have not paid it yet. Since you are obliged to make the payment, the liability is something you don’t need to forget. If you would not be able to pay for them, you will face the biggest troubles that you don’t want to happen in your life. The following are the most common liabilities faced by businesses: income taxes payable, salaries payable and accounts payable. For an individual, the following are the common liabilities: student loans, credit card bills, car loans and mortgages.
The last section in the balance sheet is the stockholders' or owner’s equity section. The former is used for the corporations while the latter is used for partnerships, sole-proprietors and individuals. The following are the things you can find in this section: dividends paid, common stock and retained earnings as well.