A balance sheet contains information about a company's assets, liabilities and shareholders' equity as of a specific date. Assets and liabilities can be categorized as long- or short-term.
Assets are resources owned by an individual or company for economic gain and may be converted to cash. They comprise current assets and long-term assets. Current assets include cash, inventory, notes receivable, accounts receivable, prepaid services and marketable securities. Long-term assets may not be converted to cash or consumed within a year. They also comprise investments and fixed assets such as land, machinery and buildings.
Liabilities are the obligations owed by an individual or company. They are also classified as current and long-term liabilities. Current liabilities are payable within a year or an operation cycle. They include wages, loans, accounts payable and notes payable. Long term liabilities are expected to be settled beyond a year or operating cycle. They include loans, pension payable and deferred income tax liability.
Shareholders' equity defines individuals' ownership of a company. This comprises their preferred stock, retained earnings, common stock and capital contribution. Total assets are a summation of the asset value of the company. Total liabilities and owner's equity consist of money owed to outsiders and company owners.