BALANCE SHEET Meaning and
Definition
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A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time, usually at the end of an accounting period, such as the end of a month, quarter, or year. It presents a summary of a company's assets, liabilities, and shareholders' equity.
The balance sheet follows the fundamental accounting equation, which states that a company's assets equal its liabilities plus shareholders' equity. This equation serves as the foundation for the balance sheet.
The balance sheet is divided into three main sections: assets, liabilities, and shareholders' equity. The assets section includes all the resources owned by a company, such as cash, accounts receivable, inventory, property, plant, and equipment. Liabilities represent the company's obligations or debts, including accounts payable, loans, and accrued expenses. Shareholders' equity is the residual interest in the assets after deducting liabilities and represents the ownership interest of shareholders.
The balance sheet is crucial for assessing a company's solvency, financial stability, and overall financial health. It allows investors, creditors, and other stakeholders to evaluate a company's ability to meet its short-term and long-term obligations, its liquidity position, and the amount of capital invested by shareholders. By comparing balance sheets from different periods, stakeholders can analyze changes in a company's financial position and assess its performance over time.
Common Misspellings for BALANCE SHEET
- valance sheet
- nalance sheet
- halance sheet
- galance sheet
- bzlance sheet
- bslance sheet
- bwlance sheet
- bqlance sheet
- bakance sheet
- bapance sheet
- baoance sheet
- balznce sheet
- balsnce sheet
- balwnce sheet
- balqnce sheet
- balabce sheet
- balamce sheet
- balajce sheet
- balahce sheet
Etymology of BALANCE SHEET
The term "balance sheet" originated from the two words it is composed of: "balance" and "sheet".
The word "balance" comes from the Old French word "balancer" which means "to balance or swing". Its Latin root "bilanx" means "having two scales". The concept of balance was also associated with accounting, where accounting books were balanced by recording both the credit and debit sides of the accounts.
The word "sheet" refers to a large, flat, thin piece of material, often paper. In accounting, a balance sheet refers to a statement that presents a summary of a company's assets, liabilities, and equity at a specific point in time. The term "sheet" reflects the physical nature of the document that presents this information.
Similar spelling words for BALANCE SHEET
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