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Balance Sheet

The most important terms in time management

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What is a balance sheet?

A simple balance sheet is like a snapshot of the company’s overall financial health. It shows the assets, liabilities and equity of the company. This brings us to simple equation:

Balance sheet equation Assets = Equity + Liabilities

In Assets a company will show all the equipment, building and vehicles it has and also cash and accounts receivables.  The equity is the value of the shares issued by a company.  Liabilities show what company owes to other parties. This usually includes trade debt, short term and long term loans.

What does a balance sheet show?

A simple balance sheet should show three distinct parts: assets, liabilities and capital or “owner’s equity”, as it’s sometimes termed. Thisincludes details like the specific assets and their cost value. Based on the balance between assets on one side and owner’s equity with liabilities on the opposite side, you can get a rough sense of the valuation of a company.

Balance sheet report

Balance sheet report and pencil

How does a balance sheet help you?

A balance sheet is essentially a part of financial statement. It’s a simple but powerful tool to help gain an overview of a company’s financial health. You can use it to understand what is the companies profile, what is th difference between accounts receivable and account payble, what is the overall debit of the company.

zistemo puts business reporting in your hands by allowing you to generate and compare data over multiple time periods. Analyzing the business data is important in decisions that involve the growth of the company such as whether to buy more equipment, or if there’s enough value for investors

Accounting system B Balance sheet


Related words

Cost

What is the cost? Cost is a value of money that a company had to spend to produce its goods or services. It is calculated as the amount that company spends in order to produce a certain unit of a product.

C

Net Income Formula

What is Net Income? An important metric of effective management, workplace productivity and company growth, net income is the company’s total revenues earned, less any expenses such as production and operation costs for that period.

N

Invoice

Invoice definition An invoice is an itemized “bill” of sale. It includes two parties: the issuer and the buyer. The issuer of the invoice is the “seller” of products or services.

I

Bookkeeping

What is bookkeeping? Bookkeeping is simply the activity of keeping financial records of money that company owes and amounts owed to a company. Bookkeeping is the way individuals, businesses and non-profit organisations record and keep their financial records in an easily understood way.

B Bookkeeping Double Entry Bookkeeping

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