From the course: Reading Corporate Financial Statements

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The accounting equation and the assets section of the balance sheet

The accounting equation and the assets section of the balance sheet

From the course: Reading Corporate Financial Statements

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The accounting equation and the assets section of the balance sheet

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- When we think of the balance sheet, think of it like your favorite family Christmas pictures. My nephew's wife posted theirs on social media last year, and one photo told a story worth capturing and remembering forever. Imagine the parents of three little girls trying to pose picture perfect and they had great big smiles. Meanwhile, their three baby girls were wiggling off their laps, crying, screaming, and pouting. Nothing more needed to be said. The picture of that moment was perfect. The balance sheet is that holiday family picture. It's the financial statement that shares for a moment in time the good, the bad, the ugly, the assets, the liabilities, and the equity held by the reporting company. These three components also form the accounting equation. In fact, assets must always equal liabilities plus equity. Let's simplify this further. The assets on the left represent the resources that a business owns or has a…

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