Application of Financial Statement Essay

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Balance sheet of a business describes a picture of that business from a financial point-of-view. The balance sheet represents a real time analysis of the company and can assist all those who understand its purpose in gaining a full understanding of conducting the operations of that business. The balance sheet of a company will have sections identifying the company's assets liabilities and equity.

Assets describe the positive and liquid attributes of a company. Liabilities have the opposite effect. The equity of a balance sheet highlights the relationships between the liabilities and the assets of the organization. The owner's equity of the balance sheet helps introduce capital that is unaccounted for in either the liabilities or assets portion of the balance sheet.

Liquid assets include cash, inventory, money received from paying customers, prepaid expenses. Investments, property and other intangible assets are included within balance sheets.

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Liabilities include money owed to accounts, deferred taxes, taxes bonds and provisions. Equity might include shareholder interests for public companies. There is no universally accepted format for the balance sheet. Therefore his responsibility of each individual company to manage a system and present a balance sheet that represents the relative importance of that particular company.

Business managers may benefit from an understanding of the balance sheet in many different ways. It is important in any organization to have a concept of the company's mission and principles. Since business is judged on the amount of money that can be generated, it is almost obvious how understanding a balance sheet would benefit anyone who has interest in seeing the success of that company flourish. Tulisan (2010) supported this,….....

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