18 Dec / Balance Sheet
The balance sheet portion of a financial statement say a lot. The balance sheet is dated as a period in time. It is not a date range of information. It tells the reader the exact balance of that account on that date.
The balance sheet is made up of Assets, Liabilities and Equity. Assets are broken down between Current, Inventory, Investments, Fixed, and Other. Liabilities include Current, and Long-Term. Equity can vary depending on they type of organization.
Partnerships will use the term Capital to describe equity. Corporations will use the term Retained Earnings. Non Profits will use the term Fund Balance. Often the Equity section of a corporation will include the value of the Common Stock, Treasury Stack and any Additional Paid in Capital in addition to the Retained Earnings account.
Although investments and fixed assets are most likely valued at cost on a financial statement, the other asset and liability accounts generally will provide the current value or balance. It will tell me how much cash I have on hand, and how much money customers owe. It reflects what the cost of the inventory of hand is. It also will reflect how much the business owes to its vendors. It will also provide that current principle balance of any outstanding loans. All of this information can really provide insight to the strength of a business. And while most prefer to look at the income statement, it really needs to be read in conjunction with the balance sheet.
Tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.