A balance sheet is a financial statement that contains details of a company's assets or liabilities at a

specific point in time, is one of the three core financial statements used for evaluating the
performance of a business.

It serves as a reference document for investors and other stakeholders to get an idea of the financial
health of an organization, enables them to compare current assets and liabilities to determine the
business’s liquidity or calculate the rate at which the company generates returns as well as is used
for comparisons between financial years.

An asset is anything that has current or future economic value to a business and includes everything
controlled and owned by the company that's currently valuable or could provide monetary benefit in
the future.

A current asset is any asset which can reasonably be expected to be sold, consumed, or exhausted
through the normal operations of a business within the current fiscal year or operating cycle or
financial year.

Some examples of current assets include cash, cash equivalents, short-term investments, accounts
receivable, inventory, supplies, and prepaid expenses

Noncurrent assets are a company's long-term investments that are not easily converted to cash or
are not expected to become cash within an accounting year. Also known as long-term assets, their
costs are allocated over the number of years the asset is used and appear on a company's balance
sheet.

Examples of noncurrent assets include investments, intellectual property, real estate, and
equipment.

A liability is something a person or company owes, usually a sum of money and are settled over time
through the transfer of economic benefits including money, goods, or services.

current liabilities are often understood as all liabilities of the business that are to be settled in cash
within the fiscal year or the operating cycle of a given firm, whichever period is longer

Examples of current liabilities include accounts payable, short-term debt, dividends, and notes
payable as well as income taxes owed.

The non-current liabilities definition refers to any debts or other financial obligations that can be
paid after a year. Typical examples could include everything from pension benefits to long-term
property rentals and deferred tax payments.

Liquidity, or accounting liquidity, is a term that refers to the ease with which you can convert an
asset to cash, without affecting its market value. In other words, it's a measure of the ability of
debtors to pay their debts when they become due.

CAPITAL / OWNER’S EQUITY

THE AMOUNT OF MONEY AND RESOURCES THE OWNER INVESTS INTO A BUSINESS.

Owner's equity is essentially the owner's rights to the assets of the business.

A debtor or an accounts receivable is a customer who buys goods on credit from our business.

A creditor or an accounts payable is a supplier or firm from whom our business buys on credit.
Balance Sheet Formula

Assets= Liabilities – Capital

Working Capital = Current Assets – Current Liabilities