CFA Level 1 - Balance Sheet Basics
BALANCE SHEET BASICS


I. Basics
Within this section we'll define each asset and liability category on the balance sheet, and prepare aclassified balance sheet

Balance Sheet Categories
The balance sheet provides information on what the company owns (its assets), what it owes (its liabilities) and the value of the business to its stockholders (the shareholders' equity) as of a specific date.


Total Assets = Total Liabilities + Shareholders' Equity

  • Assets are economic resources that are expected to produce economic benefits for their owner.
  • Liabilities are obligations the company has to outside parties. Liabilities represent others' rights to the company's money or services. Examples include bank loans, debts to suppliers and debts to employees.
  • Shareholders' equity is the value of a business to its owners after all of its obligations have been met. This net worth belongs to the owners. Shareholders' equity generally reflects the amount of capital the owners have invested, plus any profits generated that were subsequently reinvested in the company. 
     
    Look Out!

    Components of Total Assets on the balance sheet are listed in order of liquidity and maturity.


Next: CFA Level 1 - Balance Sheet Components - Assets

Table of Contents
1) CFA Level 1 - Chapter 6: Financial Statements
2) CFA Level 1 - Cash Vs. Accrual Accounting
3) CFA Level 1 - Income Statement Basics
4) CFA Level 1 - Income Statement Components
5) CFA Level 1 - Income Statement: Non-recurring Items
6) CFA Level 1 - Balance Sheet Basics
7) CFA Level 1 - Balance Sheet Components - Assets
8) CFA Level 1 - Balance Sheet Components - Liabilities
9) CFA Level 1 - Shareholders' (Stockholders') Equity Basics
10) CFA Level 1 - Components of Stockholders' Equity
11) CFA Level 1 - Accounting for Dividends
12) CFA Level 1 - Accounting for Equities
13) CFA Level 1 - Revenue Recognition
14) CFA Level 1 - Revenue Recognition Methods and Implications
15) CFA Level 1 - Revenue Recognition and Accounting Entries
16) CFA Level 1 - Revenue Recognition Effects on Cash Flows and Financial Ratios
17) CFA Level 1 - The Cash Flow Statement
18) CFA Level 1 - Cash Flow Statement Basics
19) CFA Level 1 - Cash Flow Computations - Indirect Method
20) CFA Level 1 - Cash Flow Computations - Direct Method
21) CFA Level 1 - Management Discussion and Analysis & Financial Statement Footnotes
22) CFA Level 1 - The Auditor and Audit Opinion
23) CFA Level 1 - Financial Reporting Objectives and Enforcement
24) CFA Level 1 - Accounting Qualities
25) CFA Level 1 - Setting and Enforcing Global Accounting Standards
26) CFA Level 1 - Future FASB Changes

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