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The fundamental accounting equation, also called the balance sheet equation, is the foundation for the double-entry bookkeeping system and the cornerstone of the entire accounting science. Like any equation, each side will always be equal. In the accounting equation, every transaction will have a debit and credit entry, and the total debits ...
A balance sheet is often described as a "snapshot of a company's financial condition". [1] It is the summary of each and every financial statement of an organization . Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business's calendar year. [2]
Cash and cash equivalents ( CCE) are the most liquid current assets found on a business's balance sheet. Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount". [1] An investment normally counts as a cash equivalent when it has a short maturity period of 90 days or less, and can ...
On reading the balance sheet, if the accumulated losses exceed the shareholder's equity, net worth becomes negative. Net worth in this formulation does not express the market value of a firm; a firm may be worth more (or less) if sold as a going concern, or indeed if the business closes down. Net worth vs. debt is a significant aspect of ...
Book value. In accounting, book value is the value of an asset [1] according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Traditionally, a company's book value is its total assets [clarification needed] minus ...
v. t. e. In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes for an accounting period. [1] [2]
Understanding your financial worth is a crucial component in managing your personal finances. The total value of your physical assets, or your tangible net worth, is a key measure of this. By ...
Values used in calculating financial ratios are taken from the balance sheet, income statement, statement of cash flows or (sometimes) the statement of changes in equity. These comprise the firm's "accounting statements" or financial statements. The statements' data is based on the accounting method and accounting standards used by the ...
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