Additional Paid In Capital On Statement Of Cash Flows Accounting Terms – Balance Sheet

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Accounting Terms – Balance Sheet

To master accounting theory and practice, it is necessary to learn and understand key accounting terms. The most important is the balance sheet, the essence of which is described next.

concept

balance sheet It is one of the three main financial statements, including: Income statement And Cash flow statement. This financial statement reflects the basic accounting equation, where Assets = Liabilities + Equity. It means that the balance sheet includes assets, liabilities and equity and reflects the composition of assets as of a particular date and how these assets are financed with the composition of financial instruments, either by own means or by borrowed means.

It is clear from the name of this financial statement that the total value of assets is equal to the total value of liabilities and equity.

Items included

Considering the structure of balance sheet, these financial statements must provide details of the main categories of assets, liabilities and equity to enable users to judge the financial position of the entity and make adequate decisions. The following items are included:

  • Current Assets: Goods used in the operation of the business for less than one year. Include cash, accounts receivable, inventory
  • Long Term Assets: Goods used by the business for more than one year
  • Total Assets: Sum of current and long-term assets
  • Current Liabilities: Amount to be repaid to borrowers in one year or less
  • Long Term Liability: Amount to be repaid to borrowers over a period of more than one year
  • Total Liabilities: Sum of current and long-term assets
  • Equity: Amounts owned by shareholders, including equity (amount invested) and retained earnings (amount earned, but not yet distributed as dividends)
  • Total Liabilities and Equity: Sum of borrowed and own financial resources.

Therefore, this item must be included balance sheet Reflecting the financial position of the business as of a particular date and showing liquidity, i.e. the ability of the business to pay its debts on time.

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