Balance sheet what is equity

ET Financial Inclusion Summit. Malaria Mukt Bharat. Wealth Wise Series How they can help in wealth creation. Honouring Exemplary Boards. Deep Dive Into Cryptocurrency. ET Markets Conclave — Cryptocurrency. Reshape Tomorrow Tomorrow is different. Let's reshape it today. Corning Gorilla Glass TougherTogether. ET India Inc. ET Engage. ET Secure IT. Suggest a new Definition Proposed definitions will be considered for inclusion in the Economictimes. Audit Definition: Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions.

It is done to ascertain the accuracy of financial statements provided by the organisation. Description: Audit can be done internally by employees or heads of a particular department and externally by an outside firm or an independent auditor.

The idea is to check and verify the accounts by an independent authority to ensure that all books of accounts are done in a fair manner and there is no misrepresentation or fraud that is being conducted. All the public listed firms have to get their accounts audited by an independent auditor before they declare their results for any quarter. Who can perform an audit? There are four main steps in the auditing process.

The second step is to plan the audit which would include details of deadlines and the departments the auditor would cover. Is it a single department or whole organisation which the auditor would be covering.

The audit could last a day or even a week depending upon the nature of the audit. The next important step is compiling the information from the audit.

When an auditor audits the accounts or inspects key financial statements of a company, the findings are usually put out in a report or compiled in a systematic manner. The last and most important element of an audit is reporting the result. Balloon Payment Definition: Balloon payment is the lump sum payment which is attached to a loan, mortgage, or a commercial loan. This payment is usually made towards the end of the loan period.

Balloon payment is higher than what you might be paying towards the loan on a monthly basis. Description: Balloon payment can be a part of both fixed as well flexible interest rate structure. By attaching a balloon payment to a loan, the borrower is able to cut down on the interest payment that is being made on a monthly basis by the borrower. This can only be possible because the entire loan is not amortised.

Balance Sheet Basics Your balance sheet sometimes called a statement of financial position provides a snapshot of your practice's financial status at a particular point in time. This financial statement details your assets, liabilities and equity, as of a particular date.

Although a balance sheet can coincide with any date, it is usually prepared at the end of a reporting period, such as a month, quarter or year. A sample balance sheet for the fictitious Springfield Psychological Services at December 31, and is presented below, as an example.

Assets Assets are the things your practice owns that have monetary value. Your assets include concrete items such as cash, inventory and property and equipment owned, as well as marketable securities investments , prepaid expenses and money owed to you accounts receivable from payers.

Assets also include intangibles of value, like patents or trademarks held. On a balance sheet, assets are listed in categories, based on how quickly they are expected to be turned into cash, sold or consumed. Current assets, such as cash, accounts receivable and short-term investments, are listed first on the left-hand side and then totaled, followed by fixed assets, such as building and equipment.

The portion of equipment cost that is estimated to have been used up, based on the equipment's estimated useful life, may be subtracted from fixed assets in the form of accumulated depreciation to calculate net property and equipment.

Note: Various ways to calculate depreciation can have different tax implications. Talk to your accountant or financial advisor to make the most appropriate decisions for your practice. Finally, total assets are tabulated at the bottom of the assets section of the balance sheet. Liabilities Liabilities reflect all the money your practice owes to others.

This includes amounts owed on loans, accounts payable, wages, taxes and other debts. Similar to assets, liabilities are categorized based on their due date, or the timeframe within which you expect to pay them. Accessed Feb. Financial Statements. Investing Essentials. Tools for Fundamental Analysis. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance.

Your Practice. Popular Courses. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links. The accounting equation defines a company's total assets as the sum of its liabilities and shareholders' equity. What Is a Liability? A liability is something a person or company owes, usually a sum of money.

Learn What Capital Employed Is Capital employed, also known as funds employed, is the total amount of capital used for the acquisition of profits. What Are Current Liabilities? Current liabilities are a company's debts or obligations that are due to be paid to creditors within one year. What Are Liquidity Ratios? Liquidity ratios are a class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital.

What Is the Current Ratio? Investopedia is part of the Dotdash publishing family.