From the course: Reading Corporate Financial Statements
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The accounting equation and the liabilities section of the balance sheet
From the course: Reading Corporate Financial Statements
The accounting equation and the liabilities section of the balance sheet
- So let's continue with our look at the balance sheet, which reports the assets, liabilities, and equity of a business. And let's get into the liability section of the balance sheets. A business' liabilities represent the obligations the business has to others for financing the assets. Think back to the example of the mortgage lender who made it possible for you to buy your first house. Without the help of others, many businesses couldn't make it either, just like many of us who wouldn't be able to buy our first home just because it's too much cash to pull together to pay for a new home outright. Let's talk about some common business liabilities. Commonly, we buy inventory on account, which means that we'll pay that vendor later based on some previously agreed upon terms. This means we order the inventory to stock our store shelves so that the customers can find the good they need, and we can pay for it later. This…
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Contents
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The accounting equation and the assets section of the balance sheet3m 28s
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The accounting equation and the liabilities section of the balance sheet2m 29s
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The accounting equation and the equity section of the balance sheet3m 41s
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Challenge: Working with the balance sheet1m 4s
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Solution: Working with the balance sheet1m 5s
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