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Finance Glossary

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Balance Sheet


A balance sheet in common parlance is just the assets a company has. From an accounting perspective, there are many more details of value but from a simple perspective a balance sheet is just the net cash a company has on hand. Think about a chocolate pretzel stand.

Your daddy gives you $100 to start one. After 3 weeks, you have burned through $50 dollars on advertising, chocolate, pretzels and a stand. At that moment on your 22nd day, given that the residual value of your chocolate, pretzels and stand is $2, your balance sheet should show something like $52 of tangible worth. You have $50 in cash, presumably no liabilities and $2 in net recoupment in scrap if and when you go out of business.