5.2.2.1. What information can be found in the balance sheet? 

Current assets: Include cash and other assets expected to be converted into cash within the next 12 months, such as accounts receivable and inventory. 

Fixed assets: These are tangible properties, such as property, plant, and equipment, that a company owns and utilizes in its operations to generate income. Fixed assets are intended for long-term use (exceeding one year) and depreciate in value over time. 

Current liabilities: These consist of debts and other obligations that must be settled within the next 12 months. Examples include accounts payable, credit card bills, sales taxes, payroll liabilities and loan payments. 

Long-term liabilities: These are debts and other obligations due to creditors that extend beyond the next 12 months, such as loans and mortgages.  

Shareholders’ equity profits: This represents the profits retained in the business by you and other shareholders. Equity includes retained earnings, which are the cumulative profits of the company that have not been distributed to shareholders. 

Total assets must always equal total liabilities, plus the shareholders’ equity. So, the fundamental formula is always followed in the bottom line of the balance sheet.

Assets = Liabilities + Equity