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What Is The Accounting Equation Examples Balance Sheet Context Simple Exercises With Answers

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  • CategoryBalance Sheet.
  • TopicExamples of balance sheet exercises.
  • AuthorBethany Neighbour
  • PostedWed, Jul 24th 2019 13:29 PM
  • Formatjpg/jpeg

Retained earnings are a little different. Remember the formula for the balance sheet? (Assets = Liabilities + Equity?) If you’ve filled out the rest of your balance sheet template, then you will have only retained earnings left to work with. Therefore, retained earnings are equal to Assets – Liabilities – Contributed Capital.

Balance sheets are important because they it gives a snapshot of your business. The information it gives to any potential investors or lenders helps them understand how business is functions. It helps them learn about its principal resources are and any threats to its growth. Alongside an incomes statement and balance sheets, potential stakeholders can see trends over time, check ratios and balances. It can even show places where you could put cost-cutting measures in place.

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