Balance Sheets Key Terms

Understand the wealth of information found in your company's financial balance sheet

Balance sheets are an integral part of any company's accounting records. Even if you're not involved in the daily task of balance sheet management, you're likely at least interested in what all those numbers and key terms mean on your company balance sheet. Whether you're running a large corporation or working with a small business balance sheet, these terms will generally be the same.

From defining exactly what a company balance sheet is to knowing the difference between current assets and fixed assets, learning balance sheets key terms will help you gain an understanding of the daily financial status and activity of your company. Become familiar with the following information to help you gain a basic understanding of balance sheets:

1. Define what a balance sheet is and learn balance sheets key terms, from assets to liabilities.
2. Recognize related terms that impact balance sheets.
3. View sample balance sheets to fully understand key terms at work.

 

Get to know your company balance sheet

The best way to start with an introduction to balance sheets key terms is to learn exactly what a balance sheet is and what it does. In short, balance sheets are a listing of a company's liabilities and assets, but of course there's more to it than that, such as types of liabilities and assets.
Try: Learn what's meant by long- and short-term liabilities and assets such as checking accounts and government securities, as well as types of current assets such as accounts receivables at BusinessTown.com. Find the definition of balance sheets key terms such as owner's equity, notes payable and more at Inc.com.

Better understand balance sheets key terms by getting familiar with related financial terms

Not everything that impacts a financial balance sheet appears directly in the statement or summary, but is still figured into the numbers. Some factors concerning assets and liabilities need to be understood and applied when preparing a company balance sheet, such as short-term investments and intangibles.
Try: BestWaytoInvest not only provides a detailed look at balance sheets, it defines such terms as intangibles, goodwill and more. Investopedia defines the different methods of depreciation and salvage value, common terms used in reference to assets and liabilities listed on balance sheets.

Study sample balance sheets for a hands-on education in key terms

As many professionals in blue-collar trades can attest to, few things compare to hands-on training. Analyzing balance sheets can be a substantial learning experience when it comes to understanding balance sheets key terms.
Try: Get in-depth explanations and definitions for balance sheets key terms, access analytical tools and examine a sample balance sheet at the University of Florida IFAS Extension website. Business Owner's Toolkit provides the accounting equation used for balance sheets and shows how it is applied in a sample balance sheet for quick, easy reference.

 

• Invest in balance sheet analysis software to help you gain a better understanding of balance sheets. Balance sheet software is a great way to understand and apply balance sheets key terms.

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