Overview of Balance Sheet

Once when you get a set of financial records, you can over view and gets an understanding regarding condition of the organization. Or else you are also like that people who only consider some essential records for example how much amount available with organization in cash, reserves, alternative treasury and is it any net income gained by an organization? Financial statement gives important information of an organization when you experienced enough regarding what you actually search for. This is the primary information about articles linked with balance sheet. In the upcoming months, an organization will analyze the revenue account, general ledger and extra relevant information.

The financial statement reflects presentation of an organization, its economic condition on a definite point of era. The balance sheet is divided in to three parts. The first is Assets, second is Liabilities and the other one is Equity share capital of Members. These three are constantly remains equal. So the equation formed is Assets is equal to Equity share capital of Members plus Liabilities.

Assets contain hard cash, bills receivable, property, such as land, machinery, equipment, etc and advance paid expenses which an organization own. Liability is the sum of an organization which it borrows from others like loan from bank, bank overdraft account, bills payable, mortgaged loans, long term liabilities and retain earnings. A liability often includes reserves and surplus of an organization. Equity share capital of members is total value of an organization. Fundamentally, it is that an organization owns less than what it borrows. Equity share capital of members is divided into previous year and present year.

The balance sheet presents a growing, absolute presentation of an organization. Equity capital of present year reflects net income or net loss of financial report which will be either added or less from the operation of year. Current ratio is the determination of short time liquidity of an organization. It is calculated by current ratio is equal to current assets divided by current liabilities. The basics regarding financial accounts should be remembered is that it gives evaluation of assets against liabilities and equity share capital of members.

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