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Reading a business

Lesson 76 · Written for kid, teen, and little

The Balance Sheet

A balance sheet lists what a company owns and what it owes on one day.

The idea

A balance sheet is a list of everything a company owns and everything it owes, on one exact day. The things it owns are called assets — cash, buildings, trucks, products sitting on a shelf. The things it owes are called liabilities — loans, unpaid bills, money borrowed from a bank. Subtract the liabilities from the assets and the leftover belongs to the owners; that leftover is called equity. 📋

A

Words to know

5

Balance sheet

A list of what a company owns and what it owes on one day. Own $500,000 of stuff and owe $200,000, and the sheet shows both.

Asset

Something the company owns that has value, like cash or a truck.

Liability

Money the company owes to someone else, like a loan or a bill.

Equity

What is left for the owners after you take away everything owed. $500,000 owned minus $200,000 owed is $300,000 of equity.

Snapshot

A picture of one exact moment, not a whole year. It says what was true on December 31, not what happened in December.

Try it — no accountTrue or false

True or false? Swipe each card.

Card 1 of 4

Cash sitting in a company's bank account is an asset.

Swipe the card — or tap.

In the full lesson

  1. 1True or false
  2. 2Work out the number
  3. 3Make the call

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