An Introduction To The Balance Sheet
a balance sheet is a statement of net worth. it's broken up into 3 sections, assets, liabilities and equity. A equals L plus E. meet Joe. Joe goes to the bank to get a small business loan. the bank ? in cash. on the balance sheet his liabilities increased by the size of loan and his asset increase by the same ammount. the balance sheet remains in balance. Joe used the cash by the track to start on the pizza delivery service. his cash assets decrese but that's balanced by an increase in another asset, a new track. as Joe delivers pizza, the profit so recorded in the balance sheet as retained earnings in the equity section of the balance sheet. the cash from his profit is recorded in the asset section, balancing out. every month Joe make the payment against his loan, he reduces liabilities by the amount of payment and his cash is reduced by the same amount. to find out his businesses' worth, Joes subtracts liabilities from his assets. this equals the net worth of his business.
- retained earnings・・・留保利益