How To: Read a balance sheet in accounting

In this Business & Money video tutorial you will learn how to read a balance sheet in accounting. Yu can learn to read it quickly and easily as to where the company’s came from, where it went and where it is now. There are four main financial statements; balance sheets, income statements, cash flow statements and statements of shareholder equity. In the balance sheet, under assets are listed things that the company owns that have value. Liabilities are amounts of money company owes to others. Shareholders’ equity is also referred to as capital or net worth. If a company is sold and all debts are paid, shareholders’ equity is what is left. Assets = liabilities + shareholder equity. Assets are listed depending on how quickly they can be converted in to cash. Current assets are those that can be converted within a year. Non-current assets are fixed assets like trucks, office furniture and other property. Watch the video for a demonstration of the balance sheet and further instructions.