Important Terms When Dealing With a Balance Sheet
June 13, 2009 // Posted by: Insider // Category: Financial Terms, Personal Finance
A balance sheet is basically a financial statement listing the nature and amount of a company’s assets, liabilities and equity at any given time. Every type of business requires the preparation off a balance sheet; therefore it is important to know the most important terms referred to in a balance sheet.
Assets and liabilities refer to the items that belong to the company and those that are likely to incur the company expenses. There are also non-current assets which are those assets bought with the intention of remaining in use over a long period of time. Capital is usually the company shares; either preference or ordinary, while reserves are profits made by the business but have not been shared among shareholders.
Other common terms are income and expenses where income is any money coming into the company, while expenses are the total amount that the company spends in their daily routine of operations.