Nature and Purpose of the Balance sheet Flashcards
1
Q
What is a balance sheet?
A
a financial statement that details the entity’s assets, liabilities and equity at a particular point in time
2
Q
What does a Balance Sheet show?
A
○ The Assets
○ The liabilities
○ The equity
3
Q
Asset
A
What the entity owns (or controls) at a particular date
4
Q
Liabilities
A
The external claims on the entity’s assets
5
Q
The Equity
A
The internal claim on the entity’s assets
6
Q
Purpose of Balance Sheet
A
Allows users to make a preliminary assessment as to the financial position of the entity
