Chapter 3 of 10All chapters
Chapter 3 of 10
The balance sheet
A snapshot of position.
Two sides
Assets on one side, liabilities and equity on the other, always equal. It shows what is owned and owed at one date, which is not the same as what was earned.
- Current means within a year; that split matters for solvency.
- Goodwill is what was paid above the value of identifiable assets in an acquisition.
Book value
Assets are usually recorded at cost less depreciation, not at market value. A company can be worth far more or less than its balance sheet suggests.