This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
A Balance Sheet balancing the total Assets against the combined total of Liabilities and Equity.
This is the simplest representation of Balance Sheet information, and is prevalent in North America. It shows the Assets (what you have in the business) and balances that amount against the total of Liabilities and Equity (which is where the assets came from). In other words, everything you have in the business comes from investing (Capital Stock), making money (Retained Earnings ), or borrowing from sources such as banks (Loans) and suppliers (Payables) ). See also Net Asset Balance Sheet.
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Balance Sheet Equation: Total Assets = Total Liabilities + Equity |
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.