What Is on a Balance Sheet? A Memory Trick to Remember Assets, Liabilities and Owners Equity
What is on a balance sheet? In this video, you will learn a fun memory trick to remember assets, liabilities and owners equity. By the end of this clip, you will never again forget the categories found on accounting balance sheets and each of the asset, liability and owners equity sections.
In this video, I want to teach you a fun little memory trick to help you remember what you’re going to find on a balance sheet. A balance sheet, you’ll remember, is something that accountants put together and it’s one simple piece of paper that tells you everything the company owns and everything that the company owes. It’s your balance sheet and it’s one piece of paper. And there’s all kinds of words and terminologies and things that are included on it, but everything can be fit into one of three categories and this little trick is going to help you remember what those categories are.
Now you might be looking at this and saying we have the wrong slides. “Why are you talking about apples, oranges lemons?”, “I thought we were talking about balance sheets”, or “I think you have the wrong slides up here. That’s not what it’s supposed to be”. But I want you to pause for a second and think about well what would you expect to see on a balance sheet and what would that ever have to do with apples, oranges, and lemons? Take a guess.
The answer is: apples stand for “assets”, oranges stand for “owner’s equity”, and lemons stand for “liabilities”. Every single thing that fits on a balance sheet can be slotted into one of these three fruit. So, next time you look at a piece of paper that has a million different numbers on it and you feel really really overwhelmed, just remember that there’s honestly only three type of fruit that live on a balance sheet. And it’s “A” for apple or asset, “O” for orange or owner’s equity, and “L” for lemon or liability. And now you know what is on a balance sheet!