Question

A balance sheet will include detailed information about which of the following?

Answer 1

A balance sheet provides a snapshot of a company's financial position at a specific point in time and includes detailed information about the following:

1. **Assets**: This section lists everything the company owns and is typically divided into:
- **Current Assets**: Cash, accounts receivable, inventory, and other assets expected to be converted into cash or used within one year.
- **Non-Current Assets**: Long-term investments, property, plant and equipment, intangible assets, and other assets that are expected to provide value over a longer period.

2. **Liabilities**: This section details what the company owes to outside parties and is also divided into:
- **Current Liabilities**: Obligations that are due within one year, such as accounts payable, short-term debt, and other short-term liabilities.
- **Non-Current Liabilities**: Long-term obligations that are due beyond one year, such as long-term debt, deferred tax liabilities, and other long-term obligations.

3. **Equity**: This section reflects the owners' interest in the company, commonly referred to as shareholders' equity, and may include:
- Common stock
- Preferred stock
- Additional paid-in capital
- Retained earnings
- Treasury stock

The fundamental accounting equation that underlies the balance sheet is:
**Assets = Liabilities + Equity**

This equation illustrates that a company's resources (assets) are funded either by borrowing money (liabilities) or by the owners' contributions and retained earnings (equity).