2. The Balance Sheet
โ An entrepreneurโs balance sheet presents a
comprehensive look at his or her companyโs
assets, liabilities, and shareholder equity.
โ A basic grasp of each of these balance
sheet categories can be very helpful in
following the flow of funds into and out of the
business.
3. What is an Asset?
โ Simply speaking, an asset is anything purchased
or acquired that adds monetary value to a
company, to a government, or to an individualโs
personal portfolio.
โ The expectation is that such an asset will
continue to make a positive contribution to the
companyโs net worth.
4. Intangible Assets
โ Assets may be intangible; these include
patents and trademarks, as well as
copyrighted material.
โ Intangible assets such as a companyโs
reputation, the goodwill of its customers, and
the value of its brands are not calculable in
dollars and therefore would not appear on a
standard balance sheet.
5. Bearing on the Balance Sheet
โ The definition of โbalanceโ comes into play
here: Assets equal the sum total of liabilities
and common or preferred stock, as well as
retained income.
โ Assets on a balance sheet may be classified
into groups with respect to the ease of
converting them into cash.