AM NOT CLEAR WITH THE BALANCE SHEET CONCEPT....SO WHAT DOES A BALANCE SHEET TELL YOU?
Hai Gautham -A balance sheet reports the total amounts of a company's assets, liabilities, and owner's equity (or stockholders' equity) as of a previous date. -Assets include cash, accounts receivable, inventory, investments, land, buildings, equipment, some intangible assets, and others. Generally assets are reported at their cost or a lower amount due to depreciation, the cost principle, and conservatism. --The cost principle also means that some very valuable aspects of the company are not listed as assets. For example, a company's outstanding reputation, its effective management team, and its amazing brand recognition are not reported as assets if they were not acquired in a transaction involving another party or entity. -Liabilities are obligations of a company as of the balance sheet date. These include loans payable, accounts payable, warranty obligations, taxes payable, and more. -The stockholders' equity or owner's equity reports the amount of the assets that came from the owners and not from its creditors. The balance sheet allows you to easily determine the amount of a company's working capital and whether the company is highly leveraged. With every balance sheet distributed by a company there should be notes or footnotes. These notes provide important additional information about the company's financial position including potential liabilities not yet appearing as amounts on the balance sheet.
Balance Sheet is a Statement shows **true value** of the Company/firm `as on reporting date` It Gives following information: 1. Total Value of Assets 2. Net Worth of Company/firm 3. Profits and Reserves as on Date 4. Debt on Company/firm 5. Cash Blocked in Stock, Trade Receivable 6. Non Current and Current Assets Bifurcation 7. Owner fund in the Company/firm 8. Borrowed fund of Company/firm Regards CA Aakash Tanwer
Hello Gautam! It is one of the question which arise in most of the minds while going through the financials or discussing or reading financial position etc of any business organization. Lets understand point by point what does a balance sheet depicts to us. 1. Balance Sheet is nothing but a statement prepared by the management of a business organization. 2. It shows the details of the position of an organization as on a particular date including Assets and Liabilities. It is not for any period viz. from one date to another date or from one year to another year. It is on a PARTICULAR DATE. For Example, If you ask an organization a question on any date- Sir, What are the properties and assets held by your organization and what is the amount owed by your organization to others as on today, i.e. 18.07.2015? For providing you the details of the position, they will check there balance sheet as on 18.07.2015 which will contain the details of properties and assets owned (i.e. ASSETS) and the sources of these amounts (i.e. LIABILITIES). 3. However to make a better understanding and competitiveness, every organization prepare its balance sheet on 31st March. For Companies, i.e. Pvt Ltd and Ltd, the law has mandated them to prepare the balance sheet as on 31 st March of every year. Thanking You!
- Balance Sheet is a true positional statement of a business. - It shows the position of business in regard to its assets and liabilities - It is prepared on a particular date and not for any period - Balance Sheet is a statement and hence it is not an account - Since B/s is not an account so there is no need to write TO/BY with the items of Balance Sheet - Main heads are Assets and Liabilities - Assets represents the debit balances of all real and personal account on the particular date - While Liabilities represent the credit balances of all real and personal accounts on the particular date - Balance Sheet is the last statement prepared in final accounts - Balance sheet also has sub head for classification- Assets- Fixed, Current and non current assets...Liabiities-Capital, loans, current and non current liabilities
In simple term as name suggest balance sheet means List of balance of all assets and liabilities as on financial or accounting year date.
Balance sheet is a statement of Assets and liability , with liability on left and Asset on right side of it . It shows the financial position of the entity as on the particular date . **Asset on the balance sheet can be** **Fixed assets** like Land / Building , plant & Machinery , Furniture and Fixtures etc , **Investments** like fixed deposit , shares of other companies , bonds and other deposit. **Current Assets** like Cash & Bank Balance / Sundry debtors ( Account Receivable) , Closing Stock & Prepaid Expenses. **Liabilities on the balance sheet can be :** **Capital** : This is the owner contribution to the entity , in company this is known by share capital . **Long term liabilities** : - these are liabilities which will be settled in more than one year like Term Loans/ Cash Credit loan from Banks , deferred income tax liability **Current liabilities** like Sundry Creditors ( Account Payable) , Outstanding Expenses etc which will be settled within a year.
Its as name suggests Balance Sheet AS ON date . it mean whats the position as on that date of your business / profession , etc. It shows the capacity of your business for growth by recognizing various things like equity , debt , liability , asset , investment , and various other things . There are so many interpretation as per their usage . But you can simply state it that its the Current position (as on date) showing future capacity .