The Balance Sheet

What this video covers

• How the accounting equation, assets equal liabilities plus shareholders' equity, forces every balance sheet to balance and why that matters for funding questions
• The one-year liquidity cutoff that separates current assets and liabilities from long-term or fixed items
• Why depreciation is a non-cash charge that reduces reported earnings without reducing cash, and how that explains EBITDA and free cash flow add-backs
• The difference between straight-line and modified accelerated cost recovery system (MACRS) depreciation, and which front-loads tax savings
• Why land is never depreciated but timber, oil, and minerals are subject to depletion instead
• How FIFO and LIFO inventory valuation shift cost of goods sold (COGS), net income, inventory book value, and tax liability when prices rise or fall
• The exact exam trap: LIFO is permitted under U.S. generally accepted accounting principles (U.S. GAAP) but banned under international financial reporting standards (IFRS)