Introduction to Balance Sheets | Housing | Finance & Capital Markets | Khan Academy

Using a home purchase to illustrate assets, liabilities and owner's equity. Created by Sal Khan.
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Finance and capital markets on Khan Academy: This old and badly drawn tutorial covers a topic essential to anyone planning to not live in the woods -- your personal balance sheet. Since homes are usually the biggest part of these personal balance sheets, we cover that too.
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[@brco2003]

My professor, with a PhD. in Accounting, couldn't explain this simple concept... but you could... and did it clearly. Thank you, Sal!

[@neverwrest09]

How do you know everything? One minute your teaching me about cellular respiration the next minute its finance. What went wrong with my childhood?

[@ghassansiregar1376]

+neverwrest09 just read his biography, he was an MIT graduate in math, electrical engineering, and CS. Also has an MBA from Harvard business school

[@pootlovato8285]

We all learn these subjects/topics in school it all depends on how much of the info students retain. You also learn better by teaching. And hes a harvard grad so that explains a lot lol

[@blownspeakersss]

His knowledge of various subjects has VERY little to do with his schooling. It has much more to do with the fact that he's dedicated his life to learning new things -- as we all should!

[@jennyi0929]

lol

[@madelynrpoer6700]

I was JUST wondering this

[@benjaminheydecker2659]

Who is Sal paying to dance for him????????

[@merlinrajah3076]

make someone dance for you....lol

[@bighands69]

Yes ballroom dancing is an excellent pass time. You can hire people to dance with you.

[@diegoamores9295]

I think the memories from last night started to fade back into memory at an inconvenient point in time

[@krisdang]

Did he just use a stripper example xD 02:07

[@Optimally_healthy5831]

haha maybe he means like to pay for a Zumba instructor xDD

[@sierrabaker7277]

Thought I was the only one who caught that 😂

[@bighands69]

Only a filthy mind would think of a stripper.

[@cesarc.9435]

@@bighands69 hahahaha

[@thl4444]

i love his voice it's perfect for learning somehow lol

[@SasiSharon]

Wait this video is 16 years old? Yet so relatable 😮.. Sal you're really something else

[@Neileesh]

Funny how i learned to make balance sheet from you rather than my accounting professor lol

[@ArmaanKumar2000]

Me too😂

[@pootlovato8285]

Maybe you should pay attention in class missy

[@ast453000]

Although a lot of explanations start with Assets, I think the easiest term to begin with is Equity. Think of Equity as [stuff (you own) that you haven't borrowed]. Liabilities are [stuff you have borrowed]. Assets, then, is an artificial term standing for [stuff (you own) that you haven't borrowed] + [stuff you have borrowed]. Assets = [stuff you have borrowed] + [stuff (you own) that you haven't borrowed] A = L + E ===================== but some people might think that it is more intuitive to start with Assets and write: A - L = E And from this equation one can easily derive: A = L + E But the first explanation helps me understand better what Assets really are. Although, in the end it's all the same.

[@TheMistercrowley]

Your initial explanation makes equity sound like assets. It’s confusing imo.

[@macharkuluel2314]

Asset anything that puts money into your pocket every month while liability anything takes money away in your pocket

[@Alonzojrcooks19]

I love this guy, “A hundred thousandaire” @ 8:09 lol. Thank you sir.

[@ramonmendoza566]

You're an awesome man Khan! Thank you so much for helping us all! Incredibly useful, and certainly life changing information!

[@purplehazepixie]

Khan Academy got me through grade 12 bio and im SOOO EXCITED that you have videos to help get me through accounting!! thanks so much for all you do!!

[@swatisquantum]

Khan Academy is on the level of Google in my opinion. I can't learn from text books as effectively as I'm learning from your videos! Just my .02

[@samuelliljegren2152]

Hi Mr. Khan! Just wanted to thank you for helping me ace my education in business admin and economics. Couldn't have done it without you!

[@HappyKatze]

As you go through the finance playlist, you can hear bits of the financial crisis unravel. Very interesting to hear it from the teacher as we learn about finance ^^

[@qaraniqioqaraniqio2542]

You deserve to be called a teacher.

[@TheFinancialController]

Simple and to the point!

[@rowheim]

This is really cool and entertaining man thanks for all the time you put into this!

[@situmbekomubila3264]

I like your teaching style. So effective. You have really helped me in my studies in almost all my courses.

[@orclogic1495]

Taught me physics 101 in 2011, now watching Sal Khan again in 2021 waiting for the next market correction haha!

[@louiejackson25]

Man this guy is funny as hell...great videos, Im gonna take some of his finance advice and lapdance my debts away jajajaja.

[@rodneyclark9332]

Sounds like me...talking about the economy at parties lol. Your videos have taught me the basis of the financial system and are quenching my thirst for the understanding that I've had before I discovered your tutorials. Thank you and have a blessed New Year.

[@dboijahskush1251]

"use cash to make someone do something for you" right there i thought of strippers ...and then he said make someone dance for you XD

[@sondos6268]

This guy will go to heaven!!

[@angelabays1850]

I imagine Sal holding a sign saying, "Will dance for equity!" I like your videos. I actually understand them.

[@ioannislazaridis4887]

THE BEST TEACHER EVER ! THANK YOU Mr Khan for all your instructive videos. p.s. i consider my self a free person too , zero debt , i fully own my apartment , regular job and some money in E.T.F. Thanks again.

[@bullit199]

Great video. My one tip would be to have your assets and liabilities diagrams match your formula order (A= L + E). That's how I see it in other accounting basics videos.

[@zufrieden23]

Great tutorial! simple, easy, and correct!

[@frdoze]

great job..thank you for making this easy to digest

[@mayj77]

This is the most informal (aka BEST) explanation ever Thankyou!

[@newsgirl132]

You're awesome. Makes a lot more sense now!

[@aligulbaz]

Kindly make complete course like economics on Accounting.

[@MuscleSculptor]

excellent stuff, Khan. Really broken down to simple and understandable language and pictures...for basics of credit management and accounting (with stuff like housing purchases etc). I have a degree in accounting...and I know that this stuff here is on mark...to get a general idea of the concepts. Anyway, keep up the good work...

[@rinskydances93]

My god this man is legendary. Here i was thinking he was just an amazing maths teacher, but no, he does accounting tutorials too! god bless you.

[@sabu083]

hi you made balance sheet look very simple..cant get simpler than what you have explained.thanks a lot for making me understand basic concept of balance sheet.

[@franco521]

6:00 part of banks made of granite and doing silly things is the highlight of the video!

[@ahmadfraz4140]

Sir ur lecture design very beautifull.lecture deliver of balance sheet through examples sre awsums. I got it everything THANK.YOU

[@akanechan06]

Thank you!!

[@cmatrainerumar]

Thank you so much for this video

[@matthew96oliver]

You are a boss man!! You are my study for business studies

[@-Muhammad_Ali-]

i loved your describtion of the bank.. the vids are very informative too

[@AzhanAbdulRahim]

This is very well explained. Thank you.

[@fallingskies11]

I WOULD APPRECIATE MORE ACCOUNTING VIDEOS :( i love using this videos as complements to my college courses!

[@danz8569]

im from 2022.

[@livadi23]

Great videos man thanks!

[@dwichiesa]

Love it! Damn wish I watched this earlier

[@tomlindsay7861]

great video thank you.

[@fleshcookie]

at parties peoples eyes start to glaze over. Your killin me Sal!!

[@TotalTimeout]

Thanks, this was quite helpful :)

[@RaNeMoO]

Thank you so much (: God bless u

[@maddecent08]

thank u so much for this!!!!

[@ns3510]

"I have an IOU to dance for someone in the future - it'll be hard to value" That's because it's priceless! 🤣

[@yab5163]

thank you so much!!!

[@hannahjean731]

THANK YOU!!

[@lorenzofranco8406]

Where I'm from, assets go on the left-hand side of the balance sheet. Whereas, the liabilities and equity go on the right. Furthermore, the 'assets = liabilities + equity' formula is somewhat misleading. I say this, because, in order to utilise such a formula, you have to calculate the equity. And, equity is the last thing to calculate in a balance sheet. I was taught: equity = assets - liabilities. This way, it indicates what order you should complete the balance sheet in. In other words, calculate and add assets (or its monetary values) together. Then, calculate and add liabilities (or its monetary values) together. THEN, take the liabilities away from the assets, which will leave you with the equity.

[@cristinacarreiro8969]

+Lorenzo Franco Same here. That's how I've been taught it too. Debits (Assets) go on the left and Credits (Liabilities and Equity) go on the right side. Same formula as well.

[@lorenzofranco8406]

Cristina Carreiro Precisely, homie.

[@jyotirmoydas6653]

Lorenzo Franco You took a loan of 750k from the bank, you had 250k in your hand. Total becomes 1000k which you pay to but the house for 1M. So, after buying the house, how do you have an equity of 250k? Just curious.

[@lorenzofranco8406]

Because the asset of the house amounts to $1m, which is broken down into a liability of $750k and an equity of $250k. Asset(s) = Equity + Liability

[@Dani-ww5qr]

anyone come from reading Rich Dad Poor Dad? I keep hearing Robert Kiyosaki's protests when ever Khan says the house is an asset haha.

[@crazyhatdance]

Same! I kept cringing at his explanation.

[@linuxd]

The concept of equity is starting to make a little more sense to me

[@TheFailmoose]

Thanks Sal!

[@juliocandiaguilar]

“Make someone dance for you” perfect haha!

[@NYQQE]

I Love You ! :D you are very smart, good in explaining and funny

[@oldiraqisback]

Why aren't you teaching at my school????? :( great stuff Mr. Khan. Thank you very much. God bless you.

[@filcox]

Subscribed...nice job

[@InstTaxSolutionsLLC]

Being able to read and interpret a balance sheet is one of the most crucial elements that anyone in business should be able to do.

[@jameelacruz6995]

U LIFESAVER SAL KHAN THANK U

[@NOURMAL21]

who needs a tutor, when i have you !!

[@Shaf1548]

You saved me :') Thanks for teaching me in the clearest/ simplest way possible.

[@ifratx3]

Robin Schaffer im taking acounting 101 with a professor who has a bad rating lol do you think i can pass just by watching his videos? have you?

[@hongyiluo9653]

Hope our teacher can teach Accounting like this video

[@pawemikoajczuk9445]

Good video At least in Poland Assets are on the left-hand-side, liabilities on the right

[@ahmer9800]

lol @ "banks do silly things" nice 2008 reference. me me chuckle and more interested in the video! thank you.

[@rezavoirdawg]

you should do all videos. Hilarious.

[@m.bilalmajid]

Wow! This is so old

[@MrUncooldude]

THANKS

[@blaskosarcevic4305]

You're really funny and intelligent, it's awesome. Don't get me wrong but what was funny to me was the way you got emotional talking about owing nothing to nobody :)

[@azadkaya]

Can you make a video about all the silly things the banks do? :)

[@neosmith166]

Eyes start to glaze over.. lol. Great video!

[@thelaw8042]

it's more accurate to define assest as anything with monetary value.

[@kalverso9851]

ayo how this dude just be knowing things bruh

[@AITODAY88]

Lol I used this is gcse, now in pre uni still needed this again lol

[@zuhaibahmed2700]

You are a hero

[@educo-mr]

GOOD

[@kvn89]

ah finally taking another class where khan comes to the rescue

[@bbylani]

Your amazing! I learn and understand a lot more from you than from Uni. Subscribed :) hoping you make more accounting and finance videos, it was very helpful thanks

[@lalsiou]

Thanks ! From a French viewer who has a bad accounting teacher

[@Littledave563]

Liquid assets are assets that are easily converted to cash. Liquid assets include: stocks, bonds, other marketable securities, and of course cash. Liquidity is the simply the sum of all your liquid assets. Hope this helps

[@danikadestinikey7477]

7:24 - “My wife was complaining that I make these things very hard to read, but what can I do?” Well, the handwriting becomes neater and general readability improves in your later videos, for sure 😆

[@abhishekravindra4008]

mesmerising quote "banks do silly things"

[@beckj28]

I really love your videos.... except for one little thing.... the jittery mouse.... I must be like a cat lol .... cant stop watching the mouse and then I get dizzy. Calm down please lol

[@RicardoDavid182]

I hope the students of today realize how lucky they are. When I finished my Accounting degree there wasn't such thing as KZbin and no such thing as ebooks that you can get at a blink of the eye. If the teacher was not so good teaching a subject, things could get really hard. You would need to hurry up to get a library book before everybody else. Also, usually students would gather to study together and if you were lucky, one guy that would know more about one given subject would try to explain to the rest of us and maybe we would take copies of his/her documents. Today, you just search the internet and usually everybody can find a lot of free information about almost any given subject.

[@ParthSKunjir]

Pls change your on screen writting equipment. By the way fantastic job

[@aen.arts.]

you can make someone dance for you. good example, Sal

[@TheLivingHeiromartyr]

Surely your liability needs to include the interest you owe? Or does you represent that by increasing the liability as time passes?

[@adamaqmal]

omg that easy.

[@tutto920i]

managerial income statement pleez this woud be so help full

[@weekipi5813]

I have a question. When you take out a loan from a bank, say it's a 100k loan with interests, how do you account interests in your balance sheet?

[@Nature1992]

@2:18, "I don't know if someone dancing to you is an economic benefit". Tiktok: AM I A JOKE TO YOU?

[@tommy9x]

I love the content but some video is low quality idk if it's long time ago, like housing lesson, you should consider remake video and keep the audio.

[@djtoddles8750]

Making someone dance for you has to be a financial benefit or rappers wouldn't be so obsessed with making it "rain"

[@Flu_Tang_Clan]

March 2008, wow. The real trouble had not even began.

[@cassandrahueth9011]

wait, what do you do with the interest on the bank loan wouldn't you have to subtract it from your $250,000 or add it to the $750,000 or something??

[@69elpresidente]

Khanacademy can you make a video on statement cash flow

[@fdr100100]

dancing is actually an economic benefit indeed