Financial Statement

-         Financial Statements provide information about a company.

-         It is done at the end of a fiscal year, twelve consecutive months.

-         All business organizations must produce financial statements for tax-purposes.

Balance sheet

-         The balance sheet shows the financial position of a business on a particular date.

-         It shows the company’s assets, liabilities and net worth.

Assets

-         Assets are items of value owned by a business.

o       Current assets are cash or anything that can quickly be turned into cash within a year.

o       Accounts receivable is money for which a company has billed its costumers but has not yet been paid.

Liabilities

-         Liabilities are debts owed by a business.

o       Accounts payable is the money that the business owes to other business that supply it with services.

o       Current liabilities must be paid within a year.

o       Long-term liabilities debt that does not have to be paid within a year.

Net Worth (Owner’s Equity)

-         Net worth is the value of the business to the owner.

-         The amount left over after liabilities have been subtracted from assets.

Assets – Liabilities = Net Worth Liabilities + Net Worth = Assets