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.Continue Reading
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.Learn more about Accounting