Define the Concept of Assets and Liabilities in a Systematic Manner
The most common mistake that every small business owner tend to make is depending on the statements of bank for monitoring the financial condition of their companies. By doing so they are actually missing out some the major elements that significantly impact their budget. Managing the funds of a company is not only about having an idea of the amount of money one has, it is also about acquiring a clear comprehension of the assets, liabilities and equity. Thus, it is essential to have an accurate and updated balance sheet.
Well, in the following write-up, I tried to cover up all the important aspects that are associated with a financial condition of a company. This comprehensive discussion would surely help those who are looking for assets and liabilities homework answers.
What is a Balance Sheet?
Balance Sheet offers a definite synopsis of the liabilities and assets that a business possesses. The former is something a company owes and the latter is what the company owns. Whatever would be left is known as the capital equity. Manuals as assets and liabilities homework answers can help you deal with details associated with this subject.
What are assets?
While the readers did already get a vague idea of what assets are prior to this point, now let us understand the varied categories into which they can be divided.
- Liquid assets comprise of cash as well as cash equivalents like money that you keep in the bank accounts, credentials justifying your deposit, bonds and sources that can be translated into cash without any loss of value. Received accounts, payments and sales that are not yet settled are also included under the domain of liquid assets.
- Current assets are anything, which would be used up or changed into cash in the near future. Accounts received, inventory, short-term investments, prepaid expenses, etc. come under this domain.
- Fixed Assets are buildings or land that your company owns. Machinery, equipment and the vehicles that are utilized on a daily basis are also included in this domain. For example, suppose you run a cafeteria, then delivery services, refrigerators, ovens, freezers and delivery vehicles would all be counted as fixed assets.
- Other assets are basically non-liquid, which would not be converted into cash in the near future. Example- security deposit that landlords take.
Manuals as assets and liabilities homework answers,can surely help you to deal with concepts associated with this subject.
What are liabilities?
Liabilities can be divided into two parts and they are described below in details.
- Anything that your company has to pay back within 12 months is known as current liability. Example- accounts or outstanding balances that are to be paid to an inventory. Wages given to laborers and monthly bills that are reimbursed also fall in this domain.
- Payments or expenses that continue beyond 12 months are known as long-term liabilities. The best example would be mortgage balance. Ongoing reimbursements and monthly bills might also be included in this category.
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What is reconciling and how important it is?
In order to get an idea of the exact amount of liabilities and assets, your company has to reconcile the statements of bank as well as credit card. Going with your assumptions can get you into troubles so always remember to seek reconciling.
By reconciling the bank statements, you are actually ensuring the safety of your company funds. After getting the list of transactions, check each of them. If there are any mistakes, call your bank to steer clear of them. Going through the bank statements would also let you detect the fraudulent charges before they start adding up.
You must also look over the statements offered by your credit card company on a monthly basis. It would let you observe if they are unauthorized purchases or duplicate charges imposed. In case, you do come across anything suspicious, make sure to call the company, verify the errors and cancel them immediately.
How can knowing about assets and liabilities reduce debts?
Having a detailed overview of the assets and liabilities of your company would allow you to easily perceive where all the money is being spent and how the expenses could be managed better. A large number of business organizations start their business with deficits, especially in the form of credit lines or loans that are to be paid back over a fixed period of time.
Understanding the business finances would surely help as it would provide you with the exceptional opportunity of finding ways that would not only bring balance to your company but also reduce debt effectually.
A balance sheet that is managed with sheer dedication and proficiency would allow your company to stay ahead of every transaction that occurs while your business is functioning. It is a kind of evidence that you might show to your bank if they ask for a record manifesting your companyâ€™s worth. The balance sheet also assures your existing investors that the finances of your business are completely under your control and it also act as a tool through which you can enhance your additional capital that you might have accumulated for investment purposes.
As a business owner, you would have much peace of mind with a properly maintained balance sheet. You would know that all your finances are in absolute order and you also get a clear picture of how much cash is readily available so that you can cover all the expenses efficiently as well as run the company seamless at the same time.
The aforementioned write-up is specifically important for those individuals, who wish to procure assets and liabilities homework answers. I hope they have got an apt solution to all your queries and doubts.