Join Rudolph Rosenberg for an in-depth discussion in this video From business activity to balance sheet, part of Financial Literacy: Reading Financial Reports.
- [Voiceover] Now let's take a few business situations…and see how they impact the balance sheet.…Let's start with investing.…You just decided to start a new company…and to invest $10,000 of your own money.…You put that money on the company bank account,…which dramatically increases the cash account…on the assets side of the balance sheet, by $10,000.…At the same time, the company now owes you $10,000.…We therefore increase the capital stock category…on the equity side by the same amount.…You actually need $15,000 more to start…your operations and ask the bank for a loan.…
The loan is granted and you get…$15,000 more on your bank account.…Again, this gets added to the cash category…of the balance sheet, totaling now $25,000.…You now have a new debt of $15,000…and need to add it to the liabilities side.…The loan you have contracted is…to be repaid during the next three years.…You therefore put one third of that loan…on the current portion of debt category.…This is the portion that would be repaid in the first year.…
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- What is a financial statement?
- Reading the balance sheet
- Understanding depreciation, liabilities, and equity
- Reading the income statement
- Understanding revenue, costs, profitability, and net income
- How cash flow works
- Analyzing financial documents with context<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.
Skill Level Appropriate for all
1. Financial Statements
2. The Balance Sheet
3. The Income Statement
4. The Cash Flow Statement
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