EPISODE 22: BALANCE STATEMENT The Balance Statement is a picture of an event - the business's financial position at the end of each month. Its purpose is to provide a clear picture of your assets, liabilities, and equity. Assets are what you own that drives revenue or supports business operations. Liabilities are long-term or additional obligations you have to gain assets. Equity is the leftovers when taking on liabilities to acquire assets.

The Balance Sheet divides assets into groups: Current and Non-Current. Current Assets are usually under 12 months old and can be easily converted to cash. Current Assets: includes cash and cash equivalents, accounts receivable, and inventory. Inventory is further subdivided in raw materials, work in process, and finished goods. Non-Current Assets includes machinery, computers, land, and buildings as well as intangible assets like goodwill, brand, and patents. Also included in this group is depreciation which represents economic costs over the life of the equipment. Liabilities are listed in two groups: current and long-term. Current is long term debt that does not come due within 12 months. This includes car payments...