4 ms·
So if Assets - Liabilities = Shareholders Equity Then Liabilities & Equity = Assets So why are there separate totals (showing the same amount) for "Assets"
by injb 6y ago
So if
Assets - Liabilities = Shareholders Equity
Then
Liabilities & Equity = Assets
So why are there separate totals (showing the same amount) for "Assets" and "Liabilities & Equity", if they are by definition the same thing?
- refrigerator 6y ago(author here) I think it’s just as a sanity check to make sure they’re equal :)
- jsmith99 6y agoYes, that's why it's called a Balance Sheet because it shows that net assets = equity, meaning it 'balances'.
- deleted 6y ago[deleted]
- toyg 6y agoAccountants often work by reaching the same number in two different ways, effectively performing a parity check. It spurs from double-entry, the foundation on which accounting is built.
- Naga 6y agoThe purpose of financial statements is to provide value to the users. It should be assumed that assets equal liabilities and equity. There's value in providing a separate liability total, since it gives a snapshot of the financial position of the company, more so than having to derive that from the total liabilities and equity.