Introduction To Finance

A balance sheet is financial statement that represents a snapshot of a companies financial situation at a point in time.
It has three main parts which are assets (everything the company owns and earns), liabilities (what the company owes to others), and shareholders Equity (the companys worth after deduction of everything it owes to others). A standard formula on the balance sheet is Assets - Liabilities = StockHoldersEquity. In other words, assets minus liabilities should equal shareholder equity or assets should equal liabilities plus shareholders equity. When the balance sheet is coupled with the income statement, which displays the companies profit, the two reports provide an overall view of the companies financial position. In the balance sheet you can find liabilities and shareholders equity items on the right side. Asset items are on the left.

Assets
An asset is an economic resource. That can be anything tangible or intangible a company owns and that produces value (like for example cash, production machines etc). There are 2 types of assets : current assets (=short term assets) and non-current (or long term) assets. Current assets are used to fund the everyday operations of the company. Current assets can be cash, short term investments (interest from very save investments like treasury bills), inventory (goods that a company has produced but not yet sold), accounts receivable (goods and services that have been rendered but not yet paid for by the customer), and prepaid expenses. Current assets are also called short term assets because they are expected to be sold or used within the next 12 months. Long term assets are assets that a company or individual holds that will generate revenue for more than one year (for example real estate, stocks and bonds).

Liabilities
Liabilities are what the company owes; Liabilities can be for example loans, debts, mortgages, accounts payable (unpaid debt for goods & services received) and other long term liabilities. There are long term and short term (or current) liabilites. Current liabilities refer to short term debt obligations of a company, to its creditors and suppliers, which are due within 1 year. Current liabilities can be any kind of short term debt, accounts payable (unpaid debt to vendors or suppliers) or accrued expenses (expenses which have been incurred but not yet invoiced like salaries, bonuses,income taxes etc).

Shareholders equity
Shareholders equity represents the net worth of a company after deducting everything the company owes to others (i.e. the liabilities). Thus, shareholders equity describes the company’s debt to the shareholders of the company. Shareholders equity plus retained earnings represent the funding for the business. The term "retained earnings" refers to the portion of the net income which is kept within the company, rather than distributed to its shareholders as a dividend.

References

http://www.mysmp.com/fundamental-analysis/balance-sheet.html
http://www.wisegeek.com/what-are-long-term-assets.htm