3.1·6 min read
Assets = Liabilities + Equity
The balance sheet always balances by construction: what a company owns equals what it owes plus what owners have put in and earned.
By the end you can
- ✓State and apply the accounting identity
- ✓Separate current from non-current items
Assets (what it owns)
- ›Cash & equivalents
- ›, (current)
- ›, intangibles (non-current)
Liabilities + Equity (claims on it)
- ›, accrued (current)
- ›Debt (current + long-term)
- ›Common stock +
Retained earnings
The cumulative a company has kept rather than paid out as dividends. It is the main bridge from the into equity each period.
Check yourself
A company has $500 of assets and $300 of liabilities. What is shareholders' equity?