What is a balance sheet?

The balance sheet, also known as the statement of financial position, is the main accounting statement indicating the financial position of an enterprise on a specific date. Using the principle of accounting balance, the balance sheet divides the transactions of assets, liabilities and shareholders' equity that conform to accounting principles into two blocks: "assets" and "liabilities and shareholders' equity". After accounting procedures such as entry, transfer, suspense, trial calculation and adjustment, it is condensed into a report based on the static enterprise situation on a specific date.

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1, assets

The assets in the balance sheet reflect the resources formed by past transactions and events, which are owned or controlled by the enterprise on a specific date and are expected to bring economic benefits to the enterprise. Assets in the balance sheet should be listed according to current assets and non-current assets, and further listed under current assets and non-current assets by nature.

2. Debt

The liabilities in the balance sheet reflect the current obligations undertaken by the enterprise on a specific date, which is expected to lead to the outflow of economic benefits from the enterprise. Liabilities should be listed in the balance sheet according to current liabilities and non-current liabilities, and further listed under the categories of current liabilities and non-current liabilities according to their nature.

Current liabilities refer to liabilities that are expected to be repaid in a normal business cycle, or are mainly held for trading purposes, or should be repaid within one year (including one year) after the balance sheet date, or the enterprise has no right to postpone repayment for more than one year after the balance sheet date.

3. Owner's equity

The owner's equity in the balance sheet is the residual equity of enterprise assets after deducting liabilities, reflecting the total net assets owned by shareholders (investors) of the enterprise on a specific date. Generally, it is listed separately according to paid-in capital, capital reserve, surplus reserve and undistributed profit.

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