How the Balance Sheet Works | Understand the Statement of Financial Position

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Find out how a balance sheet works with this special demo!
The balance sheet is one of the three main financial statements and it provides information about a company’s financial position at a certain point in time. If you want to understand the financial health of a business that’s the place to start. However, please note that’s it’s just a snapshot a certain point in time: It does NOT show the flows into and out of the accounts during the period.
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The balance sheet provides information on the company’s Assets, Liabilities and Equity. Assets are the resources the company owns and uses, and Liabilities is what it owes to others. Equity is the difference between total assets and total liabilities. This leftover money belongs to the owners of the company. Therefore, the more assets a company has and the smaller its debt, the bigger equity will be.
It all comes back to the main accounting equation: Assets equal Liabilities plus Equity or if we rearrange: Equity equals Assets minus Liabilities. A higher value for assets, a lower value for liabilities equals higher equity.
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#Accounting

[@corradolicini3681]

Your videos are amazing. I've been an accountant for over 25 years and trained many people, but now looking for simple ways to help my wife understand accounting as she gets involved in the business. I always prided myself in being great at explaining things, but I come no where near your clarity, delivery and techniques. You are very special. I mean that. Just incredible videos.

[@donworland]

Your work is GREAT, I have whittled down my accounting lessons to yours because of how clearly you've taught the art and science. I plan to go through more of your playlists as I continue learning about accounting and bookkeeping, I am subscribed! Thank you very much.

[@dennisd5776]

Interesting and effective way to explain a complicated idea.

[@excelisfun]

Thanks for the clever Juice Balance Sheet Video : )

[@rrrprogram8667]

Hi mike... Hope u are doing good...

[@LeilaGharani]

Thank you Mike. I had to drink a lot of juice in the making of this one : )

[@robertweekley5926]

@@LeilaGharani Well - You Really Did "Juice" this Demo, then!

[@youtuber.9624]

@@LeilaGharani 😄👌

[@0105251697]

It’s an amazing example Liela, You’ve cleared the confusions with a simple example Big thanks

[@LeilaGharani]

Really glad it's helpful!

[@2002muju]

Absolutely brilliant way of explaining / teaching a layman some technicalities of balance sheets. Thank you, keep up the good work 😊

[@victor7530]

Thanks Leila. This is a very clear explanation. I am doing AAT level 3 and you have reminded me of a few things and clarified a few things for me.

[@dallashill23]

I am aspiring to become an accountant and you've helped me so much. I thank you from the bottom of my heart.

[@patriciaruthdrusiledongmod3201]

I too by the grace of God😭

[@tanveekabir5768]

Same

[@melbrags]

I'm an accountant. But I must admit I've never seen a more simple explanation of a Balance Sheet and with a demonstration. Love your videos😍

[@LeilaGharani]

Great to hear!

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BORING SIMPLE THINGS MADE COMPLEX WITH TERMINOLOGIES. CREATED JOBS FOR ACCOUNTANTS. 😅

[@Thesp88]

This is amazing honestly, I can’t believe how much I’m learning with your videos. You make accounting less daunting and convoluted!!

[@LeilaGharani]

That's great to hear, Manuel!

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Amazing explanation, I've just started my Amazon FBA business and I needed this to know more about accounting. I'm gonna watch all your videos, and check if you have something for e-commerce. You're the best 🤗

[@MrZoszos]

The whole system has been designed to complicate everything especially with bogus terminologies but you've broken things down so much in ways that any average person can understand. Good job and many thanks 👍👍

[@raza107]

The way you explain BS is excellent and more than which normally expecting from expert financial analysts .it is simply you add value in your work. Well done n keep it up

[@waynethurman2144]

Hope you do a video on the cash flow statement soon! Your Excel videos are probably the best on the planet!

[@yingxufang2177]

As an international student struggling with accounting your existence means a lot really!! My life saver🥺

[@user-ye5xm2te5c]

You are a great teacher. I just could understand (before seeing your video), how liabilities are considered assets, simplifying and explaining that clearly is a gift. Thank you

[@LeilaGharani]

Happy to help!

[@ismailismaili0071]

I'm really so happy with this new series of videos thank Ms. Leila

[@1gopalakrishnarao]

Excellent Explanation. Very much informative, inspiring, even a small LKG kid understands. Salutations Madam

[@MrRchrd725]

The Best Accounting Lesson Ever.. AMAZING and APPRECIATE the Hard Work Thank You

[@amandajirwin3970]

This series is so helpfull. I should have started with these when i started my studies

[@florencepreyeuguta1056]

I'm beginning to find account so interesting through this video. And the soft voice is what makes it really wow... Thumps up

[@solarpunk_]

Leila, well done on another clear and concise video explaining the everyday business metrics finance work with. I’d really like to see an explanation of Gross Profit v’s Net Profit. Thanks

[@simonapopescu893]

Thank you very much Leila! You are a great teacher!

[@ahmedalmassri2037]

your videos always amazing, i have MBA and studied balance sheet but now i understand the concept very well really appreciate

[@letsexcel7873]

dont have words to appreciate. beautifully done. fantastic

[@kimsadowski4058]

Hands down the best explanation I have ever seen. Many thanks :)

[@LeilaGharani]

You're very welcome!

[@1rocknroy]

Rearranging the accounting equation made all the difference for me. Clears up so much. Thumbs UP UP UP and away!

[@t3geek]

Perfect timing, Leila, as I just signed up to start an MBA program. Please keep these coming!

[@LeilaGharani]

I'll do my best :)

[@subhasispatnaik975]

As usual, another critical topic explained in the best possible and simple way. You nailed it Leila..Keep shinning ❤️❤️😊😊

[@paultreviska9417]

And now I know! Thank you for the clarity. Crystal clear like the glasses

[@1000left]

EXCELLENT demonstration!!!! Thank you!!!!

[@sj6361]

Wao. Simple way of teaching and a great way of making people understand!!!

[@santomt3890]

Thank you so much, I needed a refresher. Would you be going to into specific parts of accounting? Such as account payables and receivables, The breakdowns of AP metrics like DPO, turn over etc?

[@HappyheartbyNida]

Juice example was great to understand . I never knew it was so easy. Thanks Leila

[@pdgiven]

Excellent explanation of not only the Balance Sheet but also the 'concept' of Equity' and how these are used to determine the overall financial health of a company at a particular point in time: bravo!

[@professord44]

Leila, that demonstration was just terrific. Thank you 😄

[@revivelifewithme]

Thank you so much Di for making such wonderful videos on accounting. Really appreciate it 👍

[@kstatemack1]

Make more videos please, I really need this. You wouldn't believe my accounting story, your videos are very helpful

[@carolcrossley9791]

Another really innovative way to explain the balance sheet. Well done.

[@sherazadepalma4653]

Great example !!! Balance sheet was explained really well and in a so easy way!! Thank you so much for your help Miss Leila

[@LeilaGharani]

You're very welcome!

[@stefandaniel3814]

You are the best teacher ever! Thank you for making so easy to understand! Keep doing a brilliant job!

[@LeilaGharani]

Thank you! 😃

[@whiterashonda]

You’re awesome! I’m trying to get the foundations of accounting down and your visuals and stories are most helpful! Subscribed!!! Thank you!

[@LeilaGharani]

Awesome! Thank you!

[@andrewpaladeniya6475]

Your teaching style is amazing. Thanks a lot.

[@ismailismaili0071]

that was epic to be honest thank u so much Ms. Leila

[@DougHExcel]

Thanks for the juicy video...fun with balance sheets!

[@peaceada234]

Wow this video is interesting. I just started my journey of accounting so I hope you post more of this videos cause they are quite helpful

[@christianpetersen1782]

Leila, where have you been all my life?!! I have been studying balance sheets and numbers etc for years and even asked an accountant in our finance dept to help me understand balance sheets but nothing worked. I could never work out how every time, unless by pure coincidence, Liabilities plus Stakeholders’ Equity equaled Assets. It would be so much easier to understand from the beginning if the balance diagram showed Stakeholders’ Equity on one side of the balance and Total Assets minus Total Liabilities on the other side. This is much closer to the common understanding of Profit equals Income minus Costs. It has taken until your video for me to realise that the reason it balances every time is because the stakeholders’ Equity is included but hidden in the Total Assets. I’m slow but I get there in the end! Thank you so much for simplifying it. I’m overjoyed 😄. Fantastic. You just earned a new subscriber. Mwa!

[@LidiaSchwanche]

SO GRATEFUL FOR YOUR VIDEOS!! YOUR TEACHING SKILLS ARE 💯

[@mohamedebied9622]

Very good Leila, your method is wonderful, keep going 👌

[@romeomogire4347]

Great staff,Please do more of the accounting staff from time to time I surely will help then now combine with the tutorials with real time financial analysis

[@kksanthosh]

awesome demonstration... I used to get confused on what equity is.thi video made it clear

[@albertocovarrubias4311]

Wow! The clearest, simplest, way to explain how balance sheet work. Thanks for Sharing.

[@LeilaGharani]

Glad you enjoyed it, Alberto!

[@asapusrinivas]

Thank you for simple explanation of balance sheet. Very useful. Must watch

[@aeybeec]

Been Commerce Pass out, Now Balance Sheet is Clear. Thanks Please More Video On Accounts

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You are s great Tuitor. You are improving the academic life for many students and professionals.

[@saleemahmad-mk8yg]

wow !!!! what the brilliant way of learning its simply amazing, really i am speechless -thanking you

[@alanlee823]

5 / 5 stars --- anyone starting out will now understand how and why the balance and t account -- always balances on watching this

[@SpiridonSpiridonovich]

Great visualisation. Many thanks! 🎉

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I'm so glad I found you, you are just the best.

[@getnetbiazen2329]

Simply wow on the way you explain accounting

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Your every word and every movement just has me mesmerized, you are simply amazing

[@ronvds4713]

I retired a number of years ago after starting and running a number of successful businesses. This video would have been great when I started my first buisness at 19.

[@yilinmichel]

Excellent explaination. Good video. Thank you very much. 😊

[@towfeek1338]

Thank you.... it's always thank you to your informative videos....

[@jamesperry1602]

_That really was an intelligent fun demo to understand the mechanics of the balance sheet._ TᕼᗩᑎK YOᑌ.

[@pravinr197]

Teacher your explanation about balance sheet is awesome.

[@Valentin-jh5cz]

Wow, Love your your explanation. You explain it simple and very easy to understand. You encouragement me to learn more 👍

[@RD-tu2if]

That was the most creative explanation of the balance sheet. Great video!

[@TRX2015]

fantastic video! I was lacking a basic understanding of accounting and balance sheets. this really cleared things up. Thank you!

[@LeilaGharani]

I'm happy to hear that.

[@shameemnassiree2780]

I must say you teach much better than my High School Teacher did. 😊

[@ronafortnitenoobie1392]

I enjoyed watching your video. I'm taking basic accounting and waiting for my books to arrive. My worksheets are due, and this was very helpful to grasp the bigger picture. Thank you Leila.

[@LeilaGharani]

Glad it was helpful!

[@avilbadree4695]

Totally enjoyed your demo. Thanks for sharing!

[@tristangeoffroy9286]

Delightful, thank you very much always for creativity this fun demonstration

[@michaelismael9847]

This is beyond clarity. I love it. Thanks so much

[@LeilaGharani]

Glad it was helpful!

[@ratty38]

Excellent video, simple clear and very interesting!

[@AKampoori]

Thank you Leila, you are amazing.

[@scarlettnguyen9627]

i really love your explanation compared to others. You definitely get my subscription and likes. Thanks so much for your hard work!!

[@LeilaGharani]

Awesome, thank you!

[@vijaygusain119]

Definitely enjoying the finance series...I hope you will also cover intrest, profit and lose formula and its applications in excel!

[@kateh8151]

Amazing. Such a great explanation!

[@Kishore_ki_kalam]

Till now best example for understanding of Balance sheet and it's components. 🤗🤗 i am waiting to next part of accounting trough best examples. You give. Thanksss alot

[@johngeldenhuys2158]

wow - I will have to watch this a few times- thanks

[@chetan25673]

Excellent demonstration through the way of fun.

[@iyassutesfagabre499]

What a teacher. Excellent

[@reginaldchinweze3169]

You are a great teacher. Love you so much.

[@faustopf-.]

This was extremely helpful. Thank you!

[@HarshvardhanLandge]

Leila, I am a big fan of your videos. I just love them. You have this skill of explaining difficult things in simplest possible manner. You are truly a "Guru" in Excel and finance. I am your student on UDEMY as well. Please post a video on additional concepts like EBITDA, Amortization etc. Keep up the good work. God bless you.

[@LeilaGharani]

I'm glad you like the tutorials! I'll add it to my list. Thank you for the suggestions!

[@JohnDeir]

Nice and easily explained, Thanks. In a future video can you go over depreciation to assets with the relation to taxes/balance sheet. I was in business (construction) for many years, I'm retired now but depreciation of equipment and replacement of same actually saved me on taxes once I understood it. Again Thanks.

[@abuzakariyo6906]

Best video series about accounting

[@jessiesi1412]

Very good and simple way to explain it. Thanks for the efforts

[@Lisa-mp2lw]

thank you so much for these. You make everything so easy to understand.

[@LeilaGharani]

Glad it's helpful.

[@kipngenoronoh8456]

Wow! That's great and easy to understand your explanation.

[@romulusmilea2747]

I liked a lot the part when you drank the value of depreciation and salaries, it is true, it evaporates every month from company assets. A really suggestive explanation of the balance sheet. Great understanding comes from simple things, explained beautifully. Once again, dear Leila, a splendid work. Keep going, your audience thirst for knowledge will never vanish.

[@concerned_2023]

Employees are a liability and they start becoming that the first second they start to work. You reduced assets (cash) to pay the employees, thus decreasing assets and the liability. Hopefully those employees did production work by making, or doing something thus allowing the company to sell a product increase assets (cash or receivable,), or increased efficiency by reducing expences (limit cash drawdown and increase production). Anyway, buy two bits.

[@mattschoular8844]

Thanks Leila.... Great explanation....

[@ugaznatalia]

Genius explanation. Like always!

[@ashutoshdwivedi9600]

Hi Lila, Good knowledge of accounting just you have clear my doubts

[@scotolivera8207]

Great video , it will be more beneficial if can we see you building a full financial statements from scratch and in a professional way., Thanks for your effort

[@cristinawright7262]

You made this much easier to understand than anything that was taught to me in the 4 years of getting my Bachelor's in Accounting!

[@LeilaGharani]

I'm glad to hear that, Cristina :)

[@TrailBlazer5280]

Very helpful and love the finance videos. Would love to see more

[@LeilaGharani]

Glad to hear that :)

[@kellylynch2428]

Thank you for your fun Demo that helps my brain better understand the mysterious balance sheet. I am a new subscriber now.

[@ojooluwabankole5950]

Your Explanations are second to None. I hope to meet you someday Leila.