Balance is an accounting tool that reflects the economic and financial situation of the company, where the strengths and weaknesses highlighted. With the balance can be established relatively clearcomparisons, and more direct competitors to the pre-defined objectives; detect deviations between the estimated and actual performance, and can even serve as a basis for projections about futureperformance.
The balance represents the net worth of the company (assets, debt and equity) at a given moment of time.
The balance is divided into three basic categories: assets, liabilities and equity.The asset includes everything the company owns and which is likely to be measured in money - cash (cash money, bank deposits and marketable securities), loans to customers, stocks of goods, equipment,facilities, etc..
The liability is the set of funds raised externally by the company, either through loans or through the deferral of payments (to suppliers, the state, etc.).. Finally, we have thecapital, which is the capital belonging to members. In other words, represents the value of the investment made by the owners added the profits (or minus any losses) achieved over the past years and thecurrent year.
There is a fundamental relationship that must necessarily occur in the Balance:
Assets = Liabilities + Equity
This expression is the basic principle of accounting, whereby thepurchase of business assets (assets) have to be financed by capital from shareholders (equity) or borrowed capital (liabilities). Another key aspect is the relationship between current assets and currentliabilities (payable within less or aum year). If the former exceeds the latter, the company demonstrates its ability to meet short-term commitments. Otherwise, it is likely that the company be forcedto seek loans to pay off their debts more immediate.
The balance sheet is a document based financial accounting document that expresses patrimonial The situation of a company at a given date. The...
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