We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- The Assets side of the Balance sheet displays all the company’s assets.
- Assets are expected to give an economic benefit during their useful life.
- Assets are classified as Non-current and Current assets.
- The useful life of Non-current assets is likely to last beyond 365 days or 12 months.
- Current assets are expected to pay off within 365 days or 12 months.
- Assets inclusive of depreciation are called the ‘Gross Block.’
- Net Block = Gross Block – Accumulated Depreciation
- The sum of all assets should equal the sum of all liabilities. Only then the Balance sheet
- is said to have balanced.
- The Balance sheet and P&L statement are inseparable. They are connected in many ways.
what is the interpretion of Decreasing Non Current asset and increase in current asset?
A decrease in long-term assets means the company is selling off stuff. YOu need to figure why they are doing it. Maybe because debt is high? Increase in current assets means the company’s working capital is improving.
Sum of all assets is equal to sum of all liabilities ensures balance sheet is balanced. What is meant by this statement? As pe rmy understanding, if assets value more than liabilities then it represents good financial health.
From a balance sheet perspective, if assets are more than a liability, then how is the company financing such assets?
I did not understand the other equity part. how it is part of liability?
You need to look at it from the company’s point of view, Vimit. From the company’s POV, networth is a liability to its shareholders.
sir ,
I have one doubt that where we can get these information about [document]
Please check the annual report of the company you are interested in.
Sir,
Are the reserves and surpluses represents “Treasury share”?
Not really.