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ACC 220
Oct 13, 2023
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A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time, typically at the end of an accounting period, such as a quarter or a fiscal year. It presents a company's assets, liabilities, and shareholders' equity. Below is a simplified example of a balance sheet: XYZ Company Balance Sheet As of December 31, 20XX Assets: Current Assets: Cash and Cash Equivalents: $50,000 Accounts Receivable: $75,000 Inventory: $60,000 Prepaid Expenses: $5,000 Total Current Assets: $190,000 Non-Current Assets: Property, Plant, and Equipment (PPE): Land: $100,000 Buildings: $300,000 Machinery and Equipment: $150,000 Intangible Assets: $50,000 Investments: $25,000 Total Non-Current Assets: $625,000 Total Assets: $815,000 Liabilities: Current Liabilities: Accounts Payable: $40,000 Short-Term Debt: $20,000 Accrued Liabilities: $10,000 Total Current Liabilities: $70,000 Non-Current Liabilities: Long-Term Debt: $150,000
Deferred Tax Liabilities: $30,000 Other Non-Current Liabilities: $15,000 Total Non-Current Liabilities: $195,000 Total Liabilities: $265,000 Shareholders' Equity: Common Stock: $100,000 Retained Earnings: $450,000 Total Shareholders' Equity: $550,000 Total Liabilities and Shareholders' Equity: $815,000 In this example: Assets are divided into current and non-current assets. Current assets are those expected to be converted to cash or used up within one year, while non-current assets are those with a longer life. Liabilities are similarly divided into current and non-current liabilities. Current liabilities are obligations expected to be settled within one year, and non-current liabilities are long-term obligations. Shareholders' Equity represents the residual interest in the assets of the company after deducting its liabilities. It includes common stock and retained earnings. The balance sheet adheres to the accounting equation, which states that assets must equal liabilities plus shareholders' equity. In this example, the balance sheet balances because the total assets ($815,000) equal the total liabilities ($265,000) plus shareholders' equity ($550,000).
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