The balance sheet is the document where assets, liabilities, and equity of a particular company or a person are recorded. It’s a crucial financial statement wildly used in accounting, investing, analytics, and other areas. In this article we’ll explain what a balance sheet is, cover its essential components, and answer the most common questions.
Assets, liabilities, and equity are three core accounting concepts. It’s impossible to evaluate a company properly without a thorough knowledge of them. The word “equity” has many meanings but, in this article, we focus on equity in the general accounting sense, although we briefly cover other kinds of equity too.
Assets, liabilities and equity are three basic building blocks that form the balance sheet equation and any investor should have a deep understanding of what they mean. In this article, we’ll explain what liabilities are and we’ll also provide a real example using a balance sheet of a public company.