THE BALANCE SHEET
Business accounting is concerned with more than the profits and losses that are the economic driving force. Business accounts also include the balance sheet, which is a picture of financial conditions on a given date. This statement records what a firm, person, or nation is worth at a given point in time. On one side of the balance sheet are the assets (valuable properties or righ ts owned by the firm). On the other side are two items, the liabilities (money or obligations owed by the firm) and net worth (or net value, equal to total assets minus total liabilities). One important distinction between the income statement and the balance sheet is that between stocks
balance sheet to maintain balance (a decrease an increase in liabilities, or an increase in ), ustrate how net worth always balances, sup- t hot dogs valued at $4 100 have spoiled. ountant reports to you: “Total assets are ,000; liabilities remain unchanged. This
total net worth has decreased by $40,000, and 0 choice but to write net worth down from ious $200,000 to only $160,000.” hat’s how seep score.
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