What is a balance sheet? What are its characteristics ? Discuss the need of preparing a balance sheet.

What is a balance sheet? What are its characteristics ? Discuss the need of preparing a balance sheet.

Solutions

Expert Solution

A statement prepared to determine assets and values of a business on a particular date is known as Balance Sheet. Debits represent the assets while credits signify the liabilities.

It has the following characteristics:

1. Reflects financial position of a business.

2. It is dependent on other statements such as trading and P & L account.

3. It is prepared at the end of an accounting period.

4. The balance of both sides should tally.

Balance sheet needs to be prepared due to following reasons:

1. To show financial position of business.

2. To show much assets and liabilities a business has

3. It serves as information source for internal and external users

4. It acts as a reference for balances that need to be carried forward

5. To gather an idea about the liquidity of the firm or business

6. Helps management in planning and controlling business operations.

Nabeel answered 1 year ago

Next > < Previous

Related Solutions

Discuss in the detail the Balance Sheet. What is shown on the Balance Sheet? Why is...

Discuss in the detail the Balance Sheet. What is shown on the Balance Sheet? Why is the Balance Sheet important to a hospitality firm? (400 words required this sucject is hospitality accounting Please write clear your own thought or search the internet. Thank you!) this is all the requestments

Cone Corporation is in the process of preparing its December 31, 2018, balance sheet. There are...

Cone Corporation is in the process of preparing its December 31, 2018, balance sheet. There are some questions as to the proper classification of the following items: $56,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2022. Prepaid rent of $30,000, covering the period January 1, 2019, through December 31, 2020. Note payable of $212,000. The note is payable in annual installments of $26,000 each, with the first installment payable on March 1,...

(Preparing a balance sheet) Prepare a balance sheet from the information in the popup window, ....

(Preparing a balance sheet) Prepare a balance sheet from the information in the popup window, . What are the networking capital and debt ratio? Complete the part of the balance sheet below. (Round to the nearest dollar. NOTE: Input the Accumulated depreciation account as a negative value.) Balance Sheet ASSETS Cash $ Total current assets $ $ Net fixed assets $ Total assets $ Choose from any list or enter any number in the input fields and then click Check...

What standard classifications are used in preparing a classified balance sheet? What is meant by the...

What standard classifications are used in preparing a classified balance sheet? What is meant by the term "operating cycle? Distinguish between long-term investments and property, plant, and equipment. Define current assets. What basis is used for arranging individual items within the current assets section? Describe the differences between cash and accrual accounting. Discuss the major principles in Accounting What is FASB and what is its purpose? What is revenue recognition? What are the basic elements of a financial statement? What...

(Preparing a balance sheet) Prepare a balance sheet from the information in the following table. Hint:...

(Preparing a balance sheet) Prepare a balance sheet from the information in the following table. Hint: Use the accumulated depreciation account as a negative value. Retained earnings won't be needed for the question. Cash $50,132 Accounts receivable $42,602 Accounts payable $23,319 Short-term notes payable $10,819 Inventories $40,844 Gross fixed assets $1,280,667 Other current assets $5,172 Long-term debt $200,715 Common stock $490,856 Other assets $15,160 Accumulated depreciation $311,215 Retained earnings ? What is the firm's debt ratio: _______% (Round to one...

Which of the following characteristics apply to a balance sheet?

Which of the following characteristics apply to a balance sheet?A. Another name for it is the statement of financial position.B. It indicates a company’s losses.C. It shows how much was paid out in dividends.D. It is an aggregate of activity over a period of time.

Discuss Financial Institutions, their characteristics, balance sheet issues, capital, risk, and related management issues.

Discuss the characteristics of each of the following financial statements: 1) Balance Sheet, 2) Income Statement,...

Discuss the characteristics of each of the following financial statements: 1) Balance Sheet, 2) Income Statement, and 3) Statement of Cash Flows.

Preparing Income Statement, Retained Earnings, and Balance Sheet

Prepare the Income Statement and Statement of Retained Earnings for the year 2019.Prepare the classified Balance Sheet as of December 31, 2019. Trademarks were previously acquired for $200,000 on January 1, 2018. Estimated useful life at the time of acquisition was 20 years.In 2019 there was litigation challenging these trademarks brought by a competitor and GeneralProducts successfullydefended these trademarks at a legal cost of $45,000. The new (updated) useful life of the trademarks was estimated to be 25 years from the...

What is a “classified” balance sheet ? A balance sheet that classifies its year-end as 12/31....

What is a “classified” balance sheet ? A balance sheet that classifies its year-end as 12/31. A balance sheet that only displays total assets. A balance sheet that separates assets and liabilities into current and non-current sections. A balance sheet that has a restricted audience. 2. Why doesn’t Cash Flow from Operations equal Net Income? The income statement includes non-cash items The income statement is based on accruals All of the above None of the above

Subjects