The balance sheet is one of the main financial statements. It is also known as the statement of financial position. The balance sheet reports the amount of assets, liabilities, and stockholders' (or owner's) equity at a specific moment (or point in time).
The balance sheet usually reports assets by classifications such as current assets, investments, property, plant and equipment, and other assets. Liabilities are classified as current liabilities and long-term liabilities.
The items and amounts reported on the balance sheet reflect the cost principle, matching principle, conservatism, going concern, and other basic principles as well as the more detailed rules included in the pronouncements issued by the Financial Accounting Standards Board (FASB).
Typical assets listed on the balance sheet include cash, accounts receivable, inventory, supplies, prepaid insurance, land, buildings, equipment, and intangible assets such as goodwill.
Typical liabilities include notes payable, accounts payable, wages payable, interest payable, income taxes payable, and bonds payable.
Stockholders' equity is the difference between the amounts reported for assets and liabilities.
Sample Balance Sheet Questions
1) A company's own stock that has been repurchased but has not been retired is __________________ stock.
2) The basic _________________ equation is A = L + OE.
3) The accounting principle that prevents assets from being reported at their current value.
4) The balance sheet classification under which a company reports customer deposits and receipts for services that have not yet been performed.
5) Banks and others who have lent money or supplied goods and services on credit.
6) A detailed listing of a company's accounts receivable sorted by the date of sale or the due date of the receivable is known as an ___________ of accounts receivable.
7) Money market accounts and a U.S. Treasury bill that matures in 45 days are examples of cash _______________________.
8) A balance sheet issued between the end-of-year balance sheets is referred to as an __________________ financial statement.
9) Balance sheet accounts are often referred to as real or ____________________ accounts.
10) The cost flow assumption that will result in older costs remaining on the balance sheet. (acronym)