Episode 91: Introduction to Financial Statements: The Balance Sheet, Part 1
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The balance sheet is a financial statement generated using financial accounting to address the needs of external stakeholders. External stakeholders include anyone with an interest in the company's performance, however they don't work for the company. They commonly include: investors, suppliers, creditors, and government agencies. As external stakeholders, we use financial statements, like the balance sheet, to assist us in making an informed decision related to whether or not to invest, or whether or not to extend credit (i.e. loans and accounts payable).
The balance sheet is used to summarize a company's financial position at a specific point in time. Its structure is based upon the accounting equation, which is assets = liabilities + owner's equity. Over the course of this video we walk through a sample balance sheet and review some of the more common entries that you'll see.
