business law

balance sheet

A financial statement that consists of a three-part summary of a company's assets, liabilities, and ownership equity at a particular instance in time.  It is intended to show the financial condition of a company at that time.

The balance sheet states the assets on one side and the liabilities and equity, together, on the other side.  Both sides must balance out with each other.

 

Arm's Length

Definition

Of or relating to transactions between two parties who are independent and do not have a close relationship with each other. Presumably, these parties have equal bargaining power and are not subject to undue pressure or influence from the other party. Transactions of this nature do not give rise fiduciary duties between the parties.

Accrual Method of Accounting

 One method of accounting where economic events, such as income and expenses, are recorded at the moment they are incurred, as opposed to when they are received.  This provides a more accurate statement of the current financial state of a company and is the method more frequently used by companies.

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