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Introducing the Balance Sheet's high level structure.
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[MUSIC]
0:00
Now we get to talk about
the balance sheet, woo-hoo!
0:04
Of the three big financial statements,
those being the balance sheet, P and L and
0:08
cash flow statements, the balance sheet
has two major, unique characteristics.
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The first is that the balance sheet is
a snapshot statement at a specific time.
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So unlike the P and L or cash flow,
which will show line items over
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a specific period of time,
like a fiscal year or quarter,
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the balance sheet will show a snapshot at
the end of the period being reported on.
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This is the balance sheet, as of the
moment, at the end of the quarter or year.
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If that's confusing, don't worry, we will
elaborate on that further in this stage.
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The second unique aspect of
the balance sheet is that it balances.
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Total assets will always equal
total liabilities plus equity.
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Or in other words,
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total assets will always be balanced
with total liabilities plus equity.
1:02
All right, so what does all that mean?
1:07
At a high level, and in what is
an admittedly oversimplified explanation,
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assets are property, or goods, or
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things that you have purchased, or
resources you own or have earned,
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that will provide some positive value
to your business at some point in time.
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We'll talk through some
examples here shortly.
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Liabilities are the opposite of assets.
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They are debts or obligations your
business has incurred or committed to.
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Then finally, there is equity.
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This is the amount of capital that has
been paid in and retained by the business.
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Some people find it helpful
to think about equity and
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liabilities as being the source
of the company's assets.
1:50
Okay.
We'll elaborate on this more in the next
1:54
videos.
1:56
I just wanted you to have a sort of
high-level picture before we dig in.
1:57
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