1. Basic concepts

Figure 1.10 Balance sheet

In this example, the ASSETS, CURRENT ASSETS, CASH AND CASH EQUIVALENTS are the header accounts. The “Bank account – USD” is an account. The CASH AND CASH EQUIVALENTS is the Total account.

The total Asset amount is $19 (note that the report contains 2 pages, to view the next page click the Page Down button). Check the accounting equation: Assets = Liabilities + Shareholder’s equity.

Note that for a sole proprietorship company, the difference between the Assets and Liabilities is called Owner’s Equity, for a corporation – Shareholder’s equity.

On the second page, the total amount for Liabilities and Shareholder’s equity is -$19. According to the accounting equation, the Liabilities and Shareholder’s equity should be $19. In Microsoft Dynamics AX, the Balance sheet shows the total amount that is calculated as Debit – Credit for the Asset and Liabilities accounts! The accounting equation for the Balance sheet in Microsoft Dynamics AX looks as follows: Asset + Liabilities + Shareholder’s equity = 0.