Definition of Balance Sheet: A balance sheet shows the monetary value of assets and liabilities, it is usually created towards the end of the financial year and provides a rough overview to the financial health of the firm, organisation, charity etc
Assets on a Balance Sheet
Assets can include money in bank, capital, technology, work in progress, brand name and other intangible assets. Some assets, especially the intangible assets are difficult to quantify and their is scope for exaggerating their value for the benefit of balance sheets.
Liabilities on a Balance Sheet
Liabilities include debt,
Balance Sheet and Net Worth
The net worth of a company is simply the total assets minus total liabilities. If liabilities are greater than assets then we say the company is insolvent.
Company accounts usually include:
- Balance sheet
- Profit and loss account – yearly flows