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Like the Income Statement, managers need to understand what is a Balance Sheet and the components in the Balance Sheet. In this article, we shall understand what is a Balance Sheet and in forthcoming articles all the components comprising the Balance Sheet:
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WHAT IS A BALANCE SHEET? |
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A Balance Sheet is a snapshot of the financial position of an entity. This snapshot is at a point of time. Say, as at 7 May 2006, you look at Company’s balance sheet, it reflects the financial position as at that day. After that day, the financial position company A can change to a better or worse situation. Also, remember that in the Balance Sheet, we have the three (3) key components: ASSETS= Liabilities + Owners’ Equity ( Refer to my illustration for the Dual Aspect Concept)
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DEFINE WHAT ARE THE CHARACTERISTIC OF ASSETS? |
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resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity
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WHAT ARE THE MAJOR COMPONENTS OF THE TOTAL ASSETS? |
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Comprises: |
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1. Current Assets |
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2. Property, plant and equipment |
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3. Investments |
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4. Intangible Assets |
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