Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition

Chapter 2

Balancing Your Sheets

IN THIS CHAPTER

Sticking with an asset’s historic cost

Listing common current assets

Distinguishing between tangible and intangible assets

Preparing the asset section of a balance sheet

A balance sheet reports a company’s assets, liabilities (claims against those assets), and equity (the amount of money left when you sell what you own and pay what you owe). It is one of the most important reports that a company produces, providing a snapshot of how a company's capital is being managed.

In this chapter we get the party started by focusing on assets. Regardless of how a company acquired those assets (whether by borrowing money or using their own), assets include the value of all the stuff they possess. From operating plants to inoperable pens, and even some things that have no physical existence at all, this chapter will explain how to play with your assets.

Homing in on Historic Cost

Before exploring typical business assets, you need to understand how the value of most assets normally shows up on the balance sheet. Most assets are valued on the balance ...