Reference
The same reference the simulator exposes, without leaving your build.
The accounting equation
Assets = Liabilities + Stockholders' Equity
Assets
Cash, receivables, inventory, PP&E
Liabilities
Payables, accruals, deferred revenue, debt
Stockholders' Equity
Contributed Capital
Capital raised from owners
Retained Earnings
Beginning RE + net income – dividends
Revenues
Expenses
Net Income = Revenues – Expenses
Formula syntax
=D12Link to another cell=D5-D7Arithmetic across cells=SUM(D33:D40)Sum a vertical range=D10*0.2Apply a rate=-D42Flip a sign=(D2/C2)-1Growth rateEvery figure has to be computable in one pass: a cell may read cells that are already settled, never a cell that is waiting on it. Interest looks like an exception — debt sets interest, interest feeds net income, net income feeds cash, cash pays down debt — so this course cuts the loop by charging interest on the balance the year opened with, which is known before anything else in the year is calculated.
Debt schedule: opening balance · Income statement: interest expense
Cash spent on long-lived assets. Capitalised on the balance sheet rather than expensed on the income statement.
Balance sheet: PP&E ↑ · Cash flow: investing outflow
The periodic allocation of an asset's cost across its useful life. Non-cash, but fully tax deductible.
Income statement: expense ↑ · Balance sheet: PP&E ↓ · Cash flow: add-back
Operating assets and liabilities. Growth in receivables and inventory consumes cash; growth in payables and deferred revenue releases it.
Balance sheet: current accounts · Cash flow: operating changes
Cash collected before the performance obligation is satisfied. A liability until revenue is recognised.
Balance sheet: liability ↑ · Cash flow: operating inflow
The cumulative profit a company has kept. Beginning balance plus net income less dividends.
Income statement: net income · Balance sheet: equity
Total assets less total liabilities and equity. Anything other than zero means a transaction was recorded on only one side.
Balance sheet integrity