How the Balance Sheet Works | Understand the Statement of Financial Position

Find out how a balance sheet works with this special demo!
The balance sheet is one of the three main financial statements and it provides information about a company’s financial position at a certain point in time. If you want to understand the financial health of a business that’s the place to start. However, please note that’s it’s just a snapshot a certain point in time: It does NOT show the flows into and out of the accounts during the period.

The balance sheet provides information on the company’s Assets, Liabilities and Equity. Assets are the resources the company owns and uses, and Liabilities is what it owes to others. Equity is the difference between total assets and total liabilities. This leftover money belongs to the owners of the company. Therefore, the more assets a company has and the smaller its debt, the bigger equity will be.

It all comes back to the main accounting equation: Assets equal Liabilities plus Equity or if we rearrange: Equity equals Assets minus Liabilities. A higher value for assets, a lower value for liabilities equals higher equity.

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#Accounting

[corradolicini]

Your videos are amazing. I've been an accountant for over 25 years and trained many people, but now looking for simple ways to help my wife understand accounting as she gets involved in the business. I always prided myself in being great at explaining things, but I come no where near your clarity, delivery and techniques. You are very special. I mean that. Just incredible videos.

[donworland]

Your work is GREAT, I have whittled down my accounting lessons to yours because of how clearly you've taught the art and science. I plan to go through more of your playlists as I continue learning about accounting and bookkeeping, I am subscribed! Thank you very much.

[muju]

Absolutely brilliant way of explaining / teaching a layman some technicalities of balance sheets. Thank you, keep up the good work 😊

It’s an amazing example Liela,
You’ve cleared the confusions with a simple example
Big thanks

[dennisd]

Interesting and effective way to explain a complicated idea.

[dallashill]

I am aspiring to become an accountant and you've helped me so much. I thank you from the bottom of my heart.

[victor]

Thanks Leila. This is a very clear explanation. I am doing AAT level 3 and you have reminded me of a few things and clarified a few things for me.

[ronvds]

I retired a number of years ago after starting and running a number of successful businesses. This video would have been great when I started my first buisness at 19.

[excelisfun]

Thanks for the clever Juice Balance Sheet Video : )

[waynethurman]

Hope you do a video on the cash flow statement soon! Your Excel videos are probably the best on the planet!

[Thesp]

This is amazing honestly, I can’t believe how much I’m learning with your videos. You make accounting less daunting and convoluted!!

[MrZoszos]

The whole system has been designed to complicate everything especially with bogus terminologies but you've broken things down so much in ways that any average person can understand.
Good job and many thanks 👍👍

[youssefyoussef]

Amazing explanation, I've just started my Amazon FBA business and I needed this to know more about accounting. I'm gonna watch all your videos, and check if you have something for e-commerce. You're the best 🤗

[amandajirwin]

This series is so helpfull. I should have started with these when i started my studies

[דניאלשקוריחזקיםעלבמתהחיים]

You are a great teacher. I just could understand (before seeing your video), how liabilities are considered assets, simplifying and explaining that clearly is a gift. Thank you

[solarpunk_]

Leila, well done on another clear and concise video explaining the everyday business metrics finance work with. I’d really like to see an explanation of Gross Profit v’s Net Profit. Thanks

[ismailismaili]

I'm really so happy with this new series of videos thank Ms. Leila

[florencepreyeuguta]

I'm beginning to find account so interesting through this video. And the soft voice is what makes it really wow... Thumps up

[tgeek]

Perfect timing, Leila, as I just signed up to start an MBA program. Please keep these coming!

[simonapopescu]

Thank you very much Leila! You are a great teacher!