ABSTRACT
This chapter explains a balance sheet with simple examples. A balance sheet is a statement of what you own and what you own. In business language, this is a statement of assets and liabilities at one point in time. The first heading on a balance sheet is the non-current assets. These are often referred to as assets that you mean to keep, as opposed to those that you mean to sell. Balance Sheet Headings Current Assets are short-term assets or transient assets, in that they are always changing due to their composition. For example, the bank account in a company is changing in balance every day due to transactions. By short term is meant within 12 months. The main items of transient assets are: inventory, short-term investments, accounts receivable, bank and petty cash. Inventories are at three stages in the process: raw materials, work-in-progress, and finished goods. Inventories should be valued at the lower of cost and net realisable value.
