What is Balance Sheet in Accounting Fundamentals

While the income statement and cash flow statement try to capture the performance of a company over a period of time, there is a need for another financial statement that can show the financial position of a company at the end of the period. This financial statement is known as the balance sheet.

So, let’s watch the upcoming video to know more about this financial statement.

In this video, you learnt the following:

• The shareholders, bankers and suppliers are the fund holders of a company.

  • The suppliers are a part of the core operations of a company. They grant credits.

  • The bankers and shareholders are investors who are interested in a return on their investments. They are not involved in the operations of a company.

• The procured funds are invested in the assets.

• The balance sheet shows the sources of funds acquired by a company and the uses of those funds. It indicates the amount of money it owns, the amount it owes to external parties, and the amount invested by the shareholders of a company.

• A typical balance sheet has two sides:

• The balance sheet is formulated on one basic rule: $Assets=Liabilities+Equity$

In the next segment, you will recap your learnings from this session.