give a specimen of balance sheet as per company act and also explain each item in brief
Answers
Explanation:
What is a Balance Sheet?
Balance Sheet is one of the reports of a financial statement which provides the financial condition on a given date. An entity’s balance sheet provides a lot of information which can be used to analyse the financial stability and business performance. The balance sheet is a report version of the accounting equation that is balance sheet equation where the total of assets always is equal to the total of liabilities plus shareholder’s capital.
Assets = Liability + Capital
Investors and creditors generally look at the balance sheet and infer as to how efficiently an entity can use its resources and assess the value of their investments.
The three important sections of any balance sheet are:
Assets – This is a resource owned by an entity to produce positive economic value.
Liabilities – This provides a list of debts an entity owes to others.
Capital or Equity- This is the amount invested by the shareholders
Importance of Balance Sheet
Balance sheet analysis can reveal a lot of important information about a company’s performance. Importance of balance sheet is listed below:
It is an important tool used by outsiders such as investors, creditors, and other stakeholders to understand the financial health of an entity.
It is a tool to measure the growth of an entity. This can be done by comparing the balance sheet of different years.
It is an essential document that must be submitted to the bank or investors to obtain a business loan.
It helps stakeholders to understand the business performance and liquidityposition of the entity.
It enables decision making regarding expansion projects and meet unforeseen expenses.
If the entity is funding its operations with profit or debt, it can be known by analysing the balance sheet.
Answer:
Meaning of Balance Sheet:
A balance sheet [B/S] may be defined as “a statement drawn upon a given date, generally at the end of each accounting year, to measure the exact financial position of a business, setting forth the various assets and liabilities of the concern at this date.”
From this definition it may be understood that the B/S is a statement of assets and liabilities as on a particular date. Its assets on a given date and its liabilities indicate the financial position of a concern on that date.
Explanation:
this is answer please follow me deer and like me