11
On the Other Side Liabilities and Equity
We said earlier that liabilities are what a company owes and that equity is its net worth. There’s another—only slightly different—way to look at this side of the balance sheet, which is that it shows how the assets were obtained. If a company borrows funds in any way, shape, or form to obtain an asset, the borrowing is going to show up on one or another of the liabilities lines. If it sells stock to obtain an asset, that will be reflected on one of the lines under “owners’ equity.”
TYPES OF LIABILITIES
But first things first, which on this side of the balance sheet means liabilities, the financial obligations a company owes to other entities. Liabilities are always divided into two main categories. ...
Get Financial Intelligence for IT Professionals: What You Really Need to Know About the Numbers now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
