The balance sheet is, first of all, a summary of the financial solvency of the organization. With it, you can understand the actual state of affairs in the company, how profitable or unprofitable it is. It is formed using grouping and generalized reflection of data about the company’s property and sources of its formation. Thus, a balance sheet definition is simple and easy to remember.
This information will be useful to both the company’s management and potential creditors and investors. The balance sheet shows the status of assets, liabilities to third parties, and equity at a certain date. As a rule, the balance is formed on an accrual basis for one year, broken down into quarters. The balance is also subject to submission to the tax inspectorate and statistical agencies. Now, you know what to say when asked, “What is a balance sheet?”.
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