Online Exclusive: Accounting Basics for Small Contractors — The Balance Sheet

Assets = Liabilities + Owners’ Equity Assets are the things that a company owns. There are current assets and long-term assets. Liabilities are the debts the company owes. Some examples are accounts payable, payroll taxes payable and loans payable. Owner’s Equity is the amount of assets left over after all the liabilities of the company are paid.  

Previously, we discussed some ways to improve cash flow within a company. This evolved from a question that was posed by contractors on a message board regarding the difference between profits and cash. Now, let’s go back and take a detailed look at the balance sheet as previously promised.

What is the balance sheet? It’s the financial statement that summarizes the company’s assets, liabilities and equity at any moment in time. It is also the accounting equation in financial sta

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