Essay
Identify the basic formula of a balance sheet and give an example of an item that might fall under each major component of the formula.
A.Assets = liabilities + owners equity
B.Assets - two categories
1.current - include cash and anything else that is expected to be converted into cash or consumed in the operation of the business during a period of one year or less.Examples: cash,inventory,accounts receivable
2.fixed - Fixed assets are those that are tangible and will be used over a long period of time.Example: equipment
C.Liabilities - two categories
1.current - due within one year,example accounts payable
2.long-term - anything due over one year,example notes payable/bank loan
D.Owner's Equity
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