What is the balance sheet used for?

A balance sheet is an extremely important financial statement used by business owners, investors, accountants, and other relevant stakeholders to assess a company's financial health. It helps answer several questions about a business like - its ability to meet short and long terms debts, net worth and assets and liabilities.

What is included in the balance sheet?

Apart from including a company's assets and liabilities, a balance sheet also includes short terms assets like; cash and accounts receivable; or long-term assets such as property, plant, and equipment. Similarly, its liabilities might include short-term obligations such as accounts payable and wages payable, or long-term liabilities such as bank loans and other debt obligations.

Who prepares the balance sheet?

A balance sheet could be prepared by anyone in the company be it owner or accountant or a third party, depending on the business. The balance sheet for a small privately held business may be prepared by the owner or a company bookkeeper. They may be prepared internally by a mid-size private firm and then reviewed by an external accountant. Public firms, on the other hand, are obligated to have their accounts audited by public accountants and to maintain a far higher standard of accounting.

Yarab A, Author at Tally Solutions

Posts by Yarab A:

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