Balance sheet

A financial statement reporting an entity’s assets, liabilities, and equity at a specific point in time. Its central identity is assets equal liabilities plus equity.

Asset: An economic resource controlled by an entity that is expected to provide future benefits. Assets occupy one side of the balance sheet’s accounting identity.
Accrual accounting: An accounting method that records revenues and expenses when earned or incurred, rather than when cash changes hands. Accruals create receivables, payables, and other balances shown at the reporting date.
Current ratio: A liquidity ratio calculated by dividing current assets by current liabilities. It uses balance-sheet totals to assess short-term obligation coverage.
Income statement: A financial statement reporting revenues, expenses, and profit or loss over a period. Unlike the balance sheet’s point-in-time snapshot, it covers activity across a period.
Liability: A present obligation of an entity to transfer an economic resource because of past events. Liabilities show claims against the assets that are not owners’ equity.
General ledger: The main accounting record containing an organization’s accounts and transaction balances. Its ending account balances are organized into the statement’s line items.
Working capital: Current assets minus current liabilities, measuring resources available for near-term operations. Its inputs come directly from the balance sheet’s current categories.
Cash flow statement: A financial statement reporting cash inflows and outflows from operating, investing, and financing activities. It tracks cash movement rather than all assets and obligations at one date.
Equity (finance): The residual interest in an entity’s assets after its liabilities are deducted. Equity completes the identity by representing owners’ residual claim.
Trial balance: A report listing ledger account balances to check that total debits equal total credits. It is commonly used to assemble and verify balance-sheet amounts.

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