How The BALANCE SHEET Works (Statement of Financial Position / SOFP)

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The 'Balance Sheet', or 'Statement of Financial Position' (SoFP) is one of the three major Financial Statements, along with the Income Statement and the Statement of Cash Flows. In this tutorial, you'll find out what the Balance Sheet is and how to derive it using the basic principles of 'Double Entry Accounting'. Together we'll build our own Balance Sheet from scratch using six example transactions.

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⏱️TIMESTAMPS
00:00 - Intro
00:34 - Why the Balance Sheet is Important
01:42 - What a Balance Sheet Looks Like
02:16 - Balance Sheet Definition
02:40 - Rule: Assets = Liabilities + Equity
03:05 - Past vs Present
03:54 - Core Principle: Double-Entry Accounting
04:35 - The Basic Accounting Equation
04:58 - The Balance Sheet is a Snapshot
05:16 - How to Make a Balance Sheet
05:42 - Current Assets Definition
05:56 - Non-Current Assets Definition
06:15 - Current Liabilities Definition
06:28 - Non-Current Liabilities Definition
06:35 - Equity and Retained Earnings
07:28 - Balance Sheet Example
11:01 - Retained Earnings: Linking the Income Statement and the Balance Sheet

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🔗VIDEO LINKS
▪ Assets →    • What are Assets? (Let's Break Them Down)  
▪ Liabilities →    • What Are Liabilities? (SIMPLE Explana...  
▪ Equity →    • What Does Equity ACTUALLY Mean?  
▪ T Accounts →    • T Accounts Explained SIMPLY (With 5 E...  
▪ Journal Entries →    • How JOURNAL ENTRIES Work (in Accounting)  
▪ Trial Balance →    • The TRIAL BALANCE Explained (Full Exa...  
▪ Trial Balance vs Balance Sheet →    • TRIAL BALANCE vs BALANCE SHEET  

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