Chapter 2. The Balance Sheet
One of the two main financial statements of a business…the other is the Income Statement.
The Basic Equation of Accounting
• The basic equation of accounting states: “What you have minus what you owe is what you’re worth.”
• Worth, net worth, equity, owners’ equity and shareholders’ equity all mean the same thing—the value of the enterprise belonging to its owners.
The Balance Sheet
• The Balance Sheet presents the basic equation of accounting in a slightly rearranged form:
• By definition, this equation must always ...