Balance Sheet Made Simple

An asset is defined as a possession with monetary value. This means that it is something that an individual or organization owns that has the potential to generate economic benefits or be sold for a certain amount of money. Assets can include physical items such as property or equipment, as well as intangible items such as patents or copyrights. They are typically recorded on a balance sheet and are an important component of an entity's financial position.

A liability refers to a debt that an individual or entity owes to another party. It represents an obligation to repay or settle a financial claim or obligation. This can include loans, mortgages, credit card debt, or any other form of outstanding financial obligation. Therefore, the correct answer is "a debt".

The money used to start a business is called capital. Capital refers to the financial resources or investment put into a business to generate income or profit. It can be in the form of cash, equipment, property, or other assets. Capital is essential for covering initial expenses, purchasing assets, and sustaining the business until it becomes profitable.

Cash is another term used to refer to money. It is the physical form of currency, such as banknotes and coins, that can be used to make purchases or transactions. Cash is widely accepted and recognized as a medium of exchange in most economies. It provides individuals with a tangible means of conducting financial transactions and is commonly used for everyday expenses.

Goods bought for resale are referred to as stock. Stock refers to the inventory or merchandise that a business holds for the purpose of selling it to customers. It includes both finished goods that are ready for sale and raw materials or components that are used in the production process. Stock is considered as an asset on the balance sheet of a business as it represents the value of the goods that can be sold to generate revenue.