The composition of the liabilities of the balance sheet
Posted: Tue Feb 11, 2025 8:50 am
The liabilities (right column of the balance sheet) are divided into two parts:
Internal liabilities ( equity);
External liabilities ( debts as well as provisions for risks and charges).
Equity
Equity represents the stable resources of the company. It must appear on the balance sheet before the allocation of the result . Equity mainly includes:
Share capital ;
The company's reserves ;
The bottom line .
Share capital
Share capital corresponds to the money ( cash contribution ) contributed by the partners or shareholders at the time of the creation of the company.
Company reserves
Reserves are the results from previous years that have not been distributed to shareholders. More specifically, they are the shares of profits that remain in the hands of the manager or in the company. They help support the development of the company.
The net result
Finally, the net result represents the difference between the income and expenses of the accounting year (profit or loss). It allows the company to ensure that the total assets are equal to the total liabilities.
Net result = Assets – Liabilities .
Note that equity also consists of:
Capital-related premiums ( issue, merger, contribution, etc.);
From the carry forward (credit or debit);
Investment subsidies ( financial aid granted by the State or public authorities);
Regulated provisions ( reserves not released from tax).
An entrepreneur determines the provisions for risks and charges of his business
Provisions for risks and charges
Provisions for risks and charges make it possible to record probable debts , the maturity or amount of which are not precisely determined.
Be careful, however: to record this type of debt, you must estimate its usa student data amount precisely and reliably , otherwise you could be penalized by the tax authorities.
Provisions for risks
Provisions for risks relate to doubtful or disputed customers who will not pay their receivables. Therefore, be sure to anticipate these types of events in order to avoid excessive financial losses for the company.
Provisions for charges
Provisions for charges are established at the time of closing . These are future and probable charges in the short or medium term. Thus, the amount of this provision is not certain but estimable . This is the case for provisions for renewal, restructuring ( works ), etc.
Internal liabilities ( equity);
External liabilities ( debts as well as provisions for risks and charges).
EquityEquity represents the stable resources of the company. It must appear on the balance sheet before the allocation of the result . Equity mainly includes:
Share capital ;
The company's reserves ;
The bottom line .
Share capital
Share capital corresponds to the money ( cash contribution ) contributed by the partners or shareholders at the time of the creation of the company.
Company reserves
Reserves are the results from previous years that have not been distributed to shareholders. More specifically, they are the shares of profits that remain in the hands of the manager or in the company. They help support the development of the company.
The net result
Finally, the net result represents the difference between the income and expenses of the accounting year (profit or loss). It allows the company to ensure that the total assets are equal to the total liabilities.
Net result = Assets – Liabilities .
Note that equity also consists of:Capital-related premiums ( issue, merger, contribution, etc.);
From the carry forward (credit or debit);
Investment subsidies ( financial aid granted by the State or public authorities);
Regulated provisions ( reserves not released from tax).
An entrepreneur determines the provisions for risks and charges of his business
Provisions for risks and chargesProvisions for risks and charges make it possible to record probable debts , the maturity or amount of which are not precisely determined.
Be careful, however: to record this type of debt, you must estimate its usa student data amount precisely and reliably , otherwise you could be penalized by the tax authorities.
Provisions for risks
Provisions for risks relate to doubtful or disputed customers who will not pay their receivables. Therefore, be sure to anticipate these types of events in order to avoid excessive financial losses for the company.
Provisions for charges
Provisions for charges are established at the time of closing . These are future and probable charges in the short or medium term. Thus, the amount of this provision is not certain but estimable . This is the case for provisions for renewal, restructuring ( works ), etc.