After this video, learners will be able to list out what's on a balance sheet and describe why it always balances.
- [Instructor] We will start with … the mother of all financial statements, the balance sheet. … The balance sheet embodies the accounting equation, … one of the greatest inventions of the human mind, … invented in Italy over 500 years ago. … A listing of things we own, assets, is easy, … anybody can list assets, … but the insight from the accounting equation … is to then also list where do we get the money … to buy those assets, the liabilities and the equities? … Now assets, they're valuable resources. … They are the items that will provide us … benefit in the future. … Cash, for example, is the asset … that we can all quickly identify. … If you look at the balance sheet of Apple for example, … you see that Apple had on September 29, 2018, … $25.9 million in cash. … Now that's a lot of money, … but it's not even close to being Apple's biggest asset. … Another asset is accounts receivable, … money that is owed by other people to a company, … that's another common asset. … Continuing the Apple example, at the end of September 2018, …
- Describe how decision-makers use accounting in a business.
- Recognize limitations in financial statement analysis.
- Relate the purpose of financial ratio analysis.
- Determine the primary reason for managing cash through the operating cycle.
- Define the role of efficiency in creating budgets.
- Identify differences between federal income tax and other taxes, such as state sales tax.