Any business man is interested in knowing the position of its business as existing on a particular day. He may have many questions in his mind regarding his business like....................
How much cash do I have in hand ar at bank?
What is my investment in the inventories?
How much others owe to the business?
How much I have invested in fixed or long term assets like land and building,plant and machinery, furniture and fixture?
How much expenses I have paid in advance?
What is the amount of accrued incomes i.e. the incomes earned but not yet received?
How much do I owe to others (like creditors)?
What is the amount of Long term liabilities of the business?
The amount of outstanding expenses(the expenses which are due but not yet have been paid) ?
What the amount of my total investment in the business?
.... and many more questions of these types........
All these questions are answered by one single statement and that is the Balance sheet of the firm or company.It is a quick snapshot of the financial position of the company. It shows what the company owns and what it owes to others. Balance sheet is a statement of assets and liabilities of a business. It shows the position of the business as existing on a particular day. It has two sides- Asset side and Liabilities side. All the assets of the business whether fixed or current, tangible or intangible,are shown on the right side of the balance sheet. And all the Liabilities, long term or short term, along with the Capital of the Business are shown on the left side of the balance sheet. Balance sheet is generally prepared at the end of the accounting period. But now a days accounting softwares allow the electronic recording, storing, and retrieval of accounting information. Thus you can generate financial statements at any time if you are in a habit of entering your financial transactions on regular basis.
How much cash do I have in hand ar at bank?
What is my investment in the inventories?
How much others owe to the business?
How much I have invested in fixed or long term assets like land and building,plant and machinery, furniture and fixture?
How much expenses I have paid in advance?
What is the amount of accrued incomes i.e. the incomes earned but not yet received?
How much do I owe to others (like creditors)?
What is the amount of Long term liabilities of the business?
The amount of outstanding expenses(the expenses which are due but not yet have been paid) ?
What the amount of my total investment in the business?
.... and many more questions of these types........
All these questions are answered by one single statement and that is the Balance sheet of the firm or company.It is a quick snapshot of the financial position of the company. It shows what the company owns and what it owes to others. Balance sheet is a statement of assets and liabilities of a business. It shows the position of the business as existing on a particular day. It has two sides- Asset side and Liabilities side. All the assets of the business whether fixed or current, tangible or intangible,are shown on the right side of the balance sheet. And all the Liabilities, long term or short term, along with the Capital of the Business are shown on the left side of the balance sheet. Balance sheet is generally prepared at the end of the accounting period. But now a days accounting softwares allow the electronic recording, storing, and retrieval of accounting information. Thus you can generate financial statements at any time if you are in a habit of entering your financial transactions on regular basis.
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