BNET Business Dictionary
Business Definition for: Balance Sheet
- a financial report stating the total assets, liabilities, and owners' equity of an organization at a given date, usually the last day of the accounting period. The debit side of the balance sheet states assets, while the credit side states liabilities and equity, and the two sides must be equal, or balance.
Example: Assets include cash in hand and cash anticipated (receivables), inventories of supplies and materials, properties, facilities, equipment, and whatever else the company uses to conduct business. Assets also need to reflect depreciation in the value of equipment such as machinery that has a limited expected useful life.
Liabilities include pending payments to suppliers and creditors, outstanding current and long-term debts, taxes, interest payments, and other unpaid expenses that the company has incurred.
Subtracting the value of aggregate liabilities from the value of aggregate assets reveals the value of owners' equity. Ideally, it should be positive. Owners' equity consists of capital invested by owners over the years and profits (net income) or internally generated capital, which is referred to as "retained earnings"; these are funds to be used in future operations.
As an example:ASSETS $Current:Cash8,200Securities5,000Receivables4,500Inventory & supplies6,300Fixed:Land10,000Structures90,000Equipment (less depreciation)5,000Intangibles/otherTOTAL ASSETS129,000 LIABILITIES $Payables7,000Taxes4,000Misc.3,000Bonds & notes25,000TOTAL LIABILITIES39,000SHAREHOLDERS' EQUITY (stock, par value × shares outstanding)80,000RETAINED EARNINGS10,000TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY129,000.
- Abbr. B/S
Wiktionary Definition for: Balance Sheet
- accounting : A page of accounting entries consisting of credits and debits; a ledger.
Additional Resources
- Preparing a Balance Sheet
- The balance sheet is a financial statement produced periodically, normally at the end of a calendar or financial year, and normally within an annual report. It showcases the company by measuring its financial health. Its production is a legal requirement in most countries. It is usually greeted enthusiastically by stockholders...
- Articles 2007-07-16
- Debt-Related Vulnerabilities and Financial Crises - An Application of the Balance Sheet Approach to Emerging Market Countries
- This paper responds to calls by the IMFC and the Executive Board to take forward the Fund's work on debt-related vulnerabilities and balance sheet risks. The paper has three major tasks: it provides an overview of salient balance sheet developments in emerging market economies over the last decade; it demonstrates...
- White papers 2004-07-01
- Balance Sheet Template
- A balance sheet is a financial "Snapshot" of your business at a given date in time. It includes your assets and liabilities and tells you your business's net worth. You've probably seen a formal balance sheet for other businesses, or have paid an accountant to do one for yours. If...
- Tools & templates 2004-03-01
- How to Read a Balance Sheet
- The article includes the information like Publicly traded companies are designed to make money. The conventional way of scoring this pursuit is by looking at the company's ability to grow various flavors of earnings. A company's real earnings are the earnings that make it from the Consolidated Statement of Earnings...
- White papers 2003-01-01
- Off Balance Sheet Corporate Finance with Synthetic Leases : Shortcomings and How to Avoid Them with Synthetic Debt
- Synthetic leases provide corporations with off-balance-sheet finance for acquisition of tangible assets. The financings are less efficient for financial planning purposes than conventional on-balance- sheet debt. The inefficiencies can be avoided by replacing synthetic leases with synthetic debt. Synthetic debt finance transforms lease obligations into the investment equivalent of senior...
- White papers 2001-01-01
- MD&A Disclosure on Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
- On January 22, 2003, the SEC adopted final rules under the Sarbanes-Oxley Act relating to the disclosure of off-balance sheet arrangements and known contractual obligations. The new rules amend requirements for management discussion and analysis disclosures in registration statements, periodic reports and proxy or information statements that are required to...
- White papers 2003-03-12
- Return of healthy balance sheet has Wall St. noticing Invacare. (previously troubled company cuts costs, obtains recommendations for its stock) (company profile)
- Return of healthy balance sheet has Wall St. noticing invacare Invacare Corp.'s aggressive cost-cutting spree has done more than clean up its loss-riddled balance sheet. For the first time, the Elyria-based home health-care equipment maker has turReturn of healthy balance sheet has...
- Research articles 1986-10-06
- The Balance Sheet: What Does It Mean?
- The purpose of a Balance Sheet is to report the financial position of a company at a certain point in time. It is divided into two columns. The first lists what the company owns assets on the left. The second shows what the company owes liabilities and net worth on...
- White papers 2003-01-01
- Understanding Financial Statements - Balance Sheet
- The balance sheet shows investors the value of the company's assets, liabilities debt and owner's equity. It is called a balance sheet because total assets will always equal or balance to liabilities plus owners equity. The balance sheet shows investors the net asset book value of the firm. It also...
- White papers 2009-01-01
- Off-Balance-Sheet Deals: C'est La Vie?
- The article overviews that after evolving over the last quarter-century into one of the most popular corporate finance tools in the United States — taking such forms as securitizations, synthetic leases, and unconsolidated entities — it seems that off-balance-sheet financing is being deconstructed in a hurry. Under congressional mandate, the...
- White papers 2003-01-01
- Through the Looking Glass: Non Balance Sheet Financing
- To understand precisely why the likes of Citigroup, tarnished in scandals emerging from Enron's misuse of special purpose entities, or SPEs, would be advocating the use of them in Asia takes some doing. Why? Because conduits involve a lot of fancy footwork to off-load risk. They allow banks to move...
- White papers 2003-05-01
- SEC Final Rules Adopted Pursuant to Sarbanes-Oxley Act of 2002 - Disclosure of Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
- The amendments are designed to target the means through which companies typically structure off-balance sheet transactions or otherwise incur risks of loss that are not fully transparent to investors. The definition of "off-balance sheet arrangements" will include the arrangements like : certain guarantee contracts; retained or contingent interests in assets...
- White papers 2003-01-23
- Quality of Financial Position: The Balance Sheet and Beyond
- "Assessing the quality of a company's financial position is a complex process. There is no single financial statement that sets forth all of the quantitative and qualitative information reflecting financial position—you must move beyond the balance sheet and perform further analysis to get a complete picture. Although income statements...
- White papers 2003-01-01
- Disclosure in Management's Discussion and Analysis about Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
- On January 27, 2003, the Securities and Exchange Commission adopted Securities Act Release, addressing disclosure in Management's Discussion and Analysis, or MD&A, about off balance sheet arrangements and aggregate contractual obligations. For this various amendments were made. The amendments require public companies to provide an explanation of their off-balance sheet...
- White papers 2003-01-30
- SEC Issues Final Rules Requiring Companies To Disclose Material Off-Balance Sheet Arrangements
- The Securities and Exchange Commission SEC issued final rules implementing the legislative mandate contained in Section 401a of the Sarbanes-Oxley Act the Act regarding the disclosure of material off-balance sheet arrangements. Consistent with the proposed rules, the final rules require a registrant to provide an explanation of its off-balance sheet...
- White papers 2003-03-04
- The Balance Sheet
- The balance sheet portrays the precise financial position of an organization. It contains details about all the organizational expenditures and income. The balance sheet displays the dynamics of assets and liabilities of the organization. Several factors and considerations go in the making of the final balance sheet. The paper examines...
- Presentations 2003-01-01
- Balance Sheet And Owners' Interests
- The balance sheet portrays the precise financial position of an organization at a particular point of time. It contains details about all the organizational expenditures and income. The balance sheet consists of four financial components viz. assets, liabilities, and owner's equity. The accounting equation states that the total organizational assets...
- Presentations 2003-01-01
- Taking Stock Of Where You Are: The Balance Sheet
- There are two branches of accounting viz. managerial accounting and financial accounting. The purpose of both is to assess the financial position of the organization and accordingly engage in future financial planning. The former has an internal focus. It deals with planning, implementation, and control of internal financial matters of...
- Presentations 2003-01-01
- Understanding The Balance Sheet
- The balance sheet portrays the precise financial position of an organization at a particular point of time. It contains details about all the organizational expenditures and income. The balance sheet consists of three elements viz. assets, liabilities, and owner's equity. Assets are future economic benefits visualized because of past transactions....
- Presentations 2003-01-01
- Balance Sheet And Owners' Interests
- The balance sheet portrays the precise financial position of an organization at a particular point of time. It contains details about all the organizational expenditures and income. The balance sheet consists of three elements viz. assets, liabilities, and owner's equity. The paper examines issues involved in the preparation of the...
- Presentations 2003-01-01
