Identify the Basic Formula of a Balance Sheet and Give

question 20

Essay

Identify the basic formula of a balance sheet and give an example of an item that might fall under each major component of the formula.
A.Assets = liabilities + owners equity
B.Assets - two categories
1.current - include cash and anything else that is expected to be converted into cash or consumed in the operation of the business during a period of one year or less.Examples: cash,inventory,accounts receivable
2.fixed - Fixed assets are those that are tangible and will be used over a long period of time.Example: equipment
C.Liabilities - two categories
1.current - due within one year,example accounts payable
2.long-term - anything due over one year,example notes payable/bank loan
D.Owner's Equity

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Definitions:

Effective Buffer

a strategy or mechanism that reduces the impact or intensity of a negative event or communication.

Enclosed Document

A document that is included with another piece of communication, often within an envelope or attached to an email.

Bad News

information that is unpleasant, unwanted, or negative and may cause emotional distress or disappointment.

Buffers

Preliminary statements or elements used to soften the impact of a message, particularly in written or spoken communication dealing with delicate matters.