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what is the balance sheet and how to find the financial position of the company

1 What is a balance sheet ?

  The balance sheet will include details of how the company used the money of shareholders and lenders and how much profit the company has made from it and how these profits have been transferred.

2 Why the balance sheet is prepared?

To government rules and regulations

One of the most important reasons for companies to prepare a balance sheet is the legal provision of the government, which stipulates that the company must pay tax on its assets in accordance with those legal provisions. The details of the property tax paid by the company are already with the government and the government needs this information from the company to verify that the details mentioned by the company in its balance sheet are correct.

to investors and lenders ( financial position of company )

financial position chart

The general answer to the question of why a balance sheet is made is to find out the financial position of the company, but most people are not fully aware of it, you can find a detailed description of it here on this page.

What is a financial position of company?

a question? The value of the company's assets and liabilities in 2020 to 2021 was $8000. The company borrows $500 from the bank in 2021 and the value of the company's assets and liabilities in 2021 to 2022 was $9000 now whether the financial position of company has gone up or not.

answer : This information is not sufficient to answer this question

Please understand this paragraph clearly because it is important

The financial position of the company is determined by the value of the company and the value is determined by the selling price or the credit worth

credit worth Ask for credit if you want to know your value same as the company. The creditworthiness of the company is calculated based on   equity   because according to government legal provisions the company must pay the liability before making payments to the shareholders (equity) in the event of a liquidation situation so Investors or lenders will therefore look at the balance sheet to know the financial position of the company or equity

to accounting

3 How to prepare the balance sheet?

First we need to understand the concepts of accounting Accounting is a unique concept, it is not mathematics, there are so many differences between accounting and mathematics, for example, you can have $10 and you give $2 to your friend, now you have $8 according to the mathematics concept, but according to the Accounting concept, you have $8 in cash and $2 in debt.

Further details on how to prepare a balance sheet are attached on the trading account page...


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