Accounting – An explanation of the balance

One of the company's core financial statements is known as a balance sheet. From the secular point of view, what are the different elements of the balance?

The nature of the balance sheet is that it resembles a financial picture of an organization at a given time (as opposed to a periodic income statement). For example, the balance sheet may be December 31, 2006 or whatever the closing of the financial year. Balances can be determined monthly or at other intervals. Scales contain "durable" information as opposed to "temporary" information by detecting income. For example, cash is a permanent invoice, an inbound part of the business. Revenues (sales) and expenditure are temporary accounts for a given financial year and then these balances are closed.

The balance equation is the equilibrium debt of the assets and the equity balance. The tool is a certain type of real estate you need in your business. Cash, real estate, equipment, vehicles, stocks and the like are needed to operate an enterprise. There are claims on this property: who owns the debt and the equity holdings? Debt is how much the bank (and other lenders) is the owner of your assets and equity. So the total amount of property (property) is the same as the bank's claims and the claims of the owner.

Now that we have determined the essential components of the balance, see each section in one more detail using the tools. We have provided reliable examples of what devices may be, but they are immaterial (non-physical). An example of an intangible asset is the range of receivables, that is, customers may belong to you but have not yet been paid. This is a tool because one day this money will be realized. The other intangible asset is a prepaid expense. You may have to pay a prepaid 3 year insurance policy. You have already paid for this service, but you have not yet covered the three-year insurance coverage and, in the meantime, as a tool.

Debts are also called obligations. In addition to the money paid to banks, your business can get money from suppliers. This is called payable invoices. The official statement is something of a debt that is called a payable ticket. The mortgage obligation is to be regarded as mortgaged. Debts due within one year should be considered as current payment obligations; Liabilities with a maturity of more than one year shall be regarded as long-term liabilities.

The owner's equity (or capital) can be explained by his home mortgage. The house is the asset and how much owed to the bank is the responsibility. We have property ownership. This logic can be applied to the devices as a whole; deduct the amount to be paid to the bank and the result is ownership. Depending on business types, there are different owners. The sole owner is a single owner, unlike the partnership where there are several owners. If an enterprise is built up, this section is called the shareholder's own share and the involvement of the shares.

In summary, we scanned the balance for the business (assets). Claims on such commodities are considered as liabilities and the net profit is the owner's equity. That is why balance of the balance. Equity Equity Obligations Plus Owner's Equity.

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