How The BALANCE SHEET Works (Statement of Financial Position / SOFP)
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- Äas pĆidĂĄn 30. 06. 2024
- đ„Balance Sheet Cheat Sheet â accountingstuff.com/shop
đBalance Sheet Practice Questions â accountingstuff.com/practice-...
The 'Balance Sheet', or 'Statement of Financial Position' (SoFP) is one of the three major Financial Statements, along with the Income Statement and the Statement of Cash Flows. In this tutorial, you'll find out what the Balance Sheet is and how to derive it using the basic principles of 'Double Entry Accounting'. Together we'll build our own Balance Sheet from scratch using six example transactions.
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â±ïžTIMESTAMPS
00:00 - Intro
00:34 - Why the Balance Sheet is Important
01:42 - What a Balance Sheet Looks Like
02:16 - Balance Sheet Definition
02:40 - Rule: Assets = Liabilities + Equity
03:05 - Past vs Present
03:54 - Core Principle: Double-Entry Accounting
04:35 - The Basic Accounting Equation
04:58 - The Balance Sheet is a Snapshot
05:16 - How to Make a Balance Sheet
05:42 - Current Assets Definition
05:56 - Non-Current Assets Definition
06:15 - Current Liabilities Definition
06:28 - Non-Current Liabilities Definition
06:35 - Equity and Retained Earnings
07:28 - Balance Sheet Example
11:01 - Retained Earnings: Linking the Income Statement and the Balance Sheet
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đVIDEO LINKS
âȘ Assets â âą What are Assets? (Let'...
âȘ Liabilities â âą What Are Liabilities? ...
âȘ Equity â âą What Does Equity ACTUA...
âȘ T Accounts â âą T Accounts Explained S...
âȘ Journal Entries â âą How JOURNAL ENTRIES Wo...
âȘ Trial Balance â âą The TRIAL BALANCE Expl...
âȘ Trial Balance vs Balance Sheet â âą TRIAL BALANCE vs BALAN...
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I've had loads of requests for this one, so cheers for those! If you'd like a deeper explanation of some of the topics mentioned then here are the links...
âȘ Trial Balance vs Balance Sheet â czcams.com/video/q7Nhj8vDD8M/video.html
The three components of the Balance Sheet:
âȘ Assets â czcams.com/video/rOsuqG_J0t4/video.html
âȘ Liabilities â czcams.com/video/fKRwT10Sszc/video.html
âȘ Equity â czcams.com/video/Fr5oHEYrT2A/video.html
Support for the Worked Example:
âȘ Transactions 1-5 are explained in detail in this video â czcams.com/video/kA9snSvCgW8/video.html
âȘ Transaction 6 is explained in detail here â czcams.com/video/Y-_Q3rANyxU/video.html
âȘ How to build a Trial Balance using ALL of the Example Transactions â czcams.com/video/3_PfoTzSCQE/video.html
Timestamps:
00:00 - Intro
00:34 - Why the Balance Sheet is Important
01:42 - What a Balance Sheet Looks Like
02:16 - Balance Sheet Definition
02:40 - Rule: Assets = Liabilities + Equity
03:05 - Past vs Present
03:54 - Core Principle: Double-Entry Accounting
04:35 - The Basic Accounting Equation
04:58 - The Balance Sheet is a Snapshot
05:16 - How to Make a Balance Sheet
05:42 - Current Assets Definition
05:56 - Non-Current Assets Definition
06:15 - Current Liabilities Definition
06:28 - Non-Current Liabilities Definition
06:35 - Equity and Retained Earnings
07:28 - Balance Sheet Example
11:01 - Retained Earnings: Linking the Income Statement and the Balance Sheet
So I'm just starting out with a basic accounting class this semester - Although this video helps, I still get REALLY lost. Specifically, how can I start to finally understand exactly where to record parts of a transaction, (ie: in transaction 4, how do you know to put $50 in both the Supplies and Accounts Payable sections?? Yes...the struggle is real!) Thanks for all the help! I'll definitely watch more of your videos - any specific recommendations?
Maggie Marsh hi Maggie. Since the balance sheet must always balance, i believe if youâre adding to one side (assets), you must add to the other (liabilities+equity) (Or you can add and minus to the same side eg buying $20 of equipment in cash). Since the business is paying $50 for supplies, they now have $50 worth of supplies so this goes under supplies under the assets section (on the left side). However, since the supplies werenât paid in cash, we canât credit cash by $50, but instead we credit accounts payable, which signifies that the business owes $50 to their supplier to be paid at a later date. Hope this answers your question.
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Iâve been studying business for 5 years now and it always confused me that equity didnât come under assets because I thought it was what the business owned. But now that itâs been worded as âwhat the business owes to the ownersâ I understand. Iâm kind of mind blown that it confused me for 5 years and now itâs been cleared up by a single sentence.
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Sometimes the owner use the money in the busines or vice versa. It happens.
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No worries Luis, it's great to hear that you're getting into accounting. All the best with your studies!
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Cheers Jose, hope it's making sense
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Congrats on your pass! No worries, I'm happy to help
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Hey Christian, I'm glad you found the video helpful. Cheers for the sub! All the best with sorting out your Resident Association's Balance Sheet
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Thanks Kaijin! Cheers for your suggestion
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Cheers Kristie, there are more on their way :)
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No worries Alyssa, good luck with your studies!
You've been one of the best resource for my accounting class this semester! Thank you! I still suck at understanding how it all works, but I'm able to do it (kind of) lol. Do you tutor online anywhere? If not, do you have any recommendations for other resources beyond your videos for a college student trying to survive their accounting tests?
Hey Hope! Unfortunately I don't offer any tutoring at this stage. The only resource that I recommend at the moment is 'The Accounting Game' which is a book for beginners. It's great to hear that you're figuring out how it works!
Glad I found you!
This made how balance sheets work so much easier to understand. The examples and explanations were a great help. Thank you!
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Hey Adrienne, thanks for your kind words! I'm glad to hear that you're finding these helpful. Cheers for your support and all the best with your studies!
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3:08 when you're making your first 3 financial statements
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can you please do an income statement
Thanks for your suggestion, I want to get that one done soon
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Thanks for your kind words! All the best :)
This video is amazing, I like the balance sheet creation and how you included profit and loss statement to make sense, amazing, it unlocked that missing link in my brain that the books or course I have been doing so far couldnt. You have saved my education as well. Good job! I really appreciate your videos, you got another big fan. Keep up the good work ;) And Thank you Loads
You're very welcome. I think it always helps to put the balance sheet in perspective using the income statement. Great to hear that it's making sense for you
LOVE HOW YOU BREAK THINGS DOWN ! thanks !
I Have watched about 15 videos so far and you have helped me so much. Thank you
No worries, I'm happy to help!
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You're welcome :)
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Thanks Neha, I'm glad you enjoyed it!
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No worries Max :)
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Best of luck with it all!
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Cheers Jack, glad I could help
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Thanks for your kind words :)
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Cheers Lawrence, I'm happy to help :)
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No worries Cindy!
made more sense after some time looking at what terms like "equity" and "retained earnings" thanks
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Good luck in your assignment, glad to hear that it helped!
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Glad it helped!!
Omgggg, I think it's finally starting to make sense - how the income statement affects owner's equity on the balance sheet. Now I know what my instructor is talking about.
Nice one! That bit is really critical to understand
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Hey Zee, great to hear you're feeling ready for the exam. Hope it goes well!
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