The balance sheet is a consolidated statement of property and its monetary value on the finances of a company at a specific date. A table consisting of two equal parts – Assets and Liabilities. Assets are the property of the company in monetary terms, Liabilities – from what sources they were received.
The main element of the balance sheet is the balance sheet item. The balance sheet item is the indicator of the line of assets and liabilities of the balance sheet, which characterizes certain types of property, the sources of its formation, and the company’s liabilities. Balance sheet items are combined into groups, and groups into sections. The consolidation of balance sheet items into groups or sections is carried out based on the content.
The balance sheet includes the following sections:
Asset: Non-current assets. Current assets. Liabilities: Capital and reserves. Long term duties. Short-term obligations.
Section “Non-current assets” – this is intangible assets, fixed assets, capital investments in progress, long-term financial investments, profitable investments in tangible assets.
The content of “current assets”: information about inventory balances, work in progress, information about finished products, goods. Items characterizing the amount of value added tax, the state of accounts receivable, short-term financial investments in securities and other income assets.
The section “Capital and reserves” reflects the composition and structure of equity capital, authorized capital, reserve and additional capital, retained earnings (uncovered loss).
Section “Long-term liabilities” is intended to reflect the debt at the reporting date on long-term bank loans and borrowings.
The section “Short-term liabilities” contains information on the status of settlements on short-term bank loans and borrowings, as well as on the availability of accounts payable and other short-term liabilities. It also reflects deferred income and reserves for future expenses.
The totals for the assets and liabilities of the balance sheet are called the balance sheet currency.
The balance sheet is an effective tool for understanding the financial condition of a company. And studying the content of his articles gives a broader overview of the results.