Balance Sheet

If you’re not quite sure how a balance sheet works and what it’s purpose is, listen to this brief clip about the Beginner’s Guide to Financial Statements: The Balance Sheet.

A balance sheet is also known as a statement of financial position. It’s a snapshot of a company’s financial condition at a specific moment in time. It shows the value of what the business owns, the amount of debt the business has, how much inventory is on hand, and how much money the business has to work with in the short-term.

The balance sheet helps a business owner or potential lender quickly understand the financial strength and capabilities of the business. It’s based on this equation: Assets = Liabilities + Shareholders’ Equity. The sum of both sides of the equation must balance.

Assets – anything a company owns that has value (including current assets, fixed assets, and long-term assets)

Liabilities – the amount of money that a company owes to others (including current or long-term liabilities)

Shareholders’ Equity – also known as capital or net worth; the amount owners have invested in the company’s stock, plus or minus the company’s earnings or losses since inception

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About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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