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Accounting Basics
Basic Accounting Principles
Converting Cash to Accrual
Creating a Balance Sheet
How to Define a Trial Balance
What Courses Do I Take to Become an Accountant?
How to Define an Income Statement
How to Define Positive Cash Flow
How to Become a Accountant
How to Become a Certified Public Accountant
CPA Educational Requirements
How to Pass the CPA Exam
How to Explain Debits & Credits
How to Do Accounting Transactions
What Can I Do With a CPA License?
What Are the Benefits of Being an Accountant?
How to Reconcile a Bank Balance
What Is Private Accounting?
Why Are Ethics Important in Accounting?
Why Study Accounting?
Importance of Accounting
Posting to the General Ledger
Excel Checking Reconciliation
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Summary: An accounting balance sheet has three parts to it: assets, liabilities and equity. Learn the basic balance sheet accounting formula of assets equal liabilities plus equity with tips from a certified public account in this free video on accounting.
Shanis Windland has a Bachelors of Science degree in accounting from Central Washington University. She is a certified public accountant licensed in the state of Washington. Windland...read more
"In this clip, we're going to talk about how to create a balance sheet. Essentially, there's three parts to a balance sheet. There's assets, liabilities and equity. An asset is an economic resource of a company, like cash. A liability is something owed to somebody else, like a bill. An equity is claims on the assets by the owners of a company. This is a very simple balance sheet, with essentially only one item on it. At the top we have assets, and at the bottom we have liabilities and equity. The basic accounting formula is assets are equal to liabilities plus equity. Balance sheets show the assets, liabilities and equity of a company at a certain date, like at the end of the month or the end of the year. This particular balance sheet is, we're going to pretend the only thing on it is just a house. We have a house that is worth two hundred and fifty thousand dollars. That house is an asset to us; it's a resource that we have. We're going to say that owe our liability of a mortgage of two hundred and twenty-five dollars. If the house is worth two hundred and fifty thousand dollars, we owe two hundred and twenty-five dollars, that means we have equity of twenty-five thousand dollars. So you can see that the top piece, the assets, is two hundred and fifty thousand dollars and the bottom piece, the liability and equity, is also two hundred and fifty thousand dollars. That's why it's called a balance sheet; the top and the bottom have to balance. The two hundred and fifty thousand is equal to the two hundred and fifty thousand dollars using the basic accounting formula."
eHow Article: Creating a Balance Sheet
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