Balance Sheet

let's say it's a million dollars.

Their balance sheets are identical, except for Jason's Shoes has 100,000 in debt, and Ben's Shoes has no debt.

Above this line right over here is the income statement, down here is the balance sheet.

But fair enough.

It's safer than their mattresses, so they then deposit 1,000 gold pieces with me.

What's included in the balance sheet?

So what they do is, instead of just expensing the cost of the machine, when the machine is bought on the balance sheet at the beginning of 2007, they say, we now have an asset called a machine.

That's 50,000 at this point right here, right when we bought the machine.

So patent amortization would be 1,000 in this year, 1,000 in this year, 1,000 in this year, and 1,000 in this year.

I just keep all of those 810 gold pieces as reserve.

A dream that's enabled him to post more than 2300 videos on a host of different subjects, from math, to history, to economics.

I'm just increasing both the left and the right hand side of the balance sheet for every new loan I make.

But any way you think about it, our assets will have increased by this amount of money over the course of the year.

So just, I guess, a bit of a review, just to make sure we're clearly reading this balance sheet.

But anyway, the initial question is, what is the limit to how much you can expand the asset and the liability side of the balance sheet just by creating these loans and these deposit accounts?

The way that you account for that, is on your balance sheet, you say that you are essentially owed 400, so this accounts receivable this is essential stuff that other people owe you, you need to receive this from other people, but it's an asset, other people have an obligation to you

And let's say that's all of their liabilities.

This is the angel investor, and this is all of us down here, and all of this is equity.

Maybe if these transactions occur all at once, over the course of the year, this is what the Bank of Sal's balance sheet looks like.

So I'm also solvent.

They're really the same thing

So given that 2 on 100,000 debt.

liabilities.

So let's say these are debt holders right here.

And they got an asset called loan to Bank A.

There's the income statement and the other two are the balance sheet, which I have drawn a lot in a lot of the other explanations I've done on the financial crisis and whatever else.

So liabilities. Liabilities.

Let's say assets and I'll talk about margin requirements

So I'm going to use the same Khan Academy techniques to hopefully explain some of this.

Most of what you do is you rearrange this side of the balance sheet.

But it's really a measure of the same thing.

For the liability side of my balance sheet

The government announced that they would pay their debts.

That we'll just put generally as liability.

And you could watch some of the videos that I did before the whole financial mess on the balance sheet.

And then we have the debt, the debt of the company, or the

Let's think about its liabilities.

So, do you trade off time with Luke?

Which probably,you know, that's a sign that the stink is starting to emerge from this part of the balance sheet.

I owe the bank 750,000.

This company now is completely delevered.

That means that you've increased your Accounts Payable by 100.

This is 120,000 in equity, market value of equity, he has another 105,000 in liabilites.

This was equity.