Q:

What is typically found on a balance sheet?

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Quick Answer

A balance sheet contains assets, liabilities and shareholder's equity. Assets can either be current or long-term depending on how easy it is for a company to sell or liquidate them. Liabilities refer to the money that non-shareholders have lent to the company; liabilities can be current or long-term depending on the amount of time before they are due. Shareholders' equity, also known as net assets, refers to the money that the company shareholders own.

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Full Answer

Current assets are those that require, at most, one year for a company to sell. They include cash and cash equivalents such as hard currency and treasury bills; marketable securities such as equity; inventory; and prepaid expenses such as rent and insurance. Long-term assets take more than one year for a company to sell, and include fixed assets such as land, building and machinery; they also include abstract concepts such as goodwill and intellectual property.

Current liabilities refer to money that a company should pay in a maximum period of one year and include wages payable, rent, tax, interest payable and prepayments that clients make. Long-term liabilities, on the other hand, take more than one year to be due. Long-term debts and deferred tax liability are examples of long-term liabilities.

A balance sheet is a document that shows the financial status of a company at a certain time. The value of the assets on a balance sheet must be equal to the value of the sum of liabilities and shareholders' equity.

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