Feature Need and Main Objectives of Balance Sheet Homework Answers
The businesses around the globe like to be intact about their position in the global market. Investors usually look for the company for a long run which has the efficient financial situation with their proof of records. For the long lasting positive future of the firm financial experts have to write the records and statements which can represent the business in the world.
Manuals as feature need and main objectives of balance sheet homework answers are here to help you to get the better understanding of the purpose of the balance sheet and everything about that.
Before we do the analysis of any balance sheet, let get to know the term balance sheet first.
What is balance sheet?
As the experts say, the balance sheet is the statement which shows the assets, liabilities, and equity of the firm.
- Current and noncurrent assets of the company
E.g. Cash on hand, Account Receivable, Equipment
- Short term and long term liabilities
E.g. Bank loans, Accounts Payable
E.g. Capital of stocks, Shareholder’s equity
Feature Need and Main Objectives of Balance Sheet Homework Answers manuals say the generation of balance sheet starts from the word ‘as at…’. As the balance sheet created for a particular date, it states the name ‘as at DATE.’
The balance sheet statement gives a synopsis of the financial position of the company on the certain date. How the company is capable of paying all the debts, are there any outdated assets, are there any loans which cannot be paid in the short term, etc.
What is the need of generating document of balance sheet?
Business owners often stay busy around the year in taking major decisions. Sometimes, they do not put their eye on the insights of the firm. Owners do not care about how much every little thing costs in operation, in manufacturing department, and in the delivery department.
What the top people are interested in, how much profit is generated from the invested asset.
For example, there is company ABC, manufactures chocolates and managers proposes to buy the individual machine which does not cost much. Business owners will not resist doing so if they machine is generating the decent profit.
- Top level people of business owners do not get involved in the small day to day decisions but, they look at the balance sheet to understand if the invested asset is helping in revenue generation. That way owners do not have to include themselves in small decisions but, still, they can keep an eye on if something is useful or not.
- Secondly, as feature need and main objectives of balance sheet homework answers manuals point out, the balance sheet is a statement which warns the business people if they are able to pay some outstanding amounts or not. If there are any excessive loans, it is a sign to financiers not to take any loans in future or else it can be a massive debt for the company. If the liabilities are more than assets, then it put the company in danger of bankruptcy. To remove the risk of debt, financial advisers can suggest the next move before it becomes too late.
- Furthermore, the value of the balance sheet document increases when the company wants to get loans for essential purposes. A positive assessment of balance sheet helps the business to get credits and loans.
- Lastly, the balance sheet with more assets attracts the investors. Investors are interested to know where their money will go and what they can expect in return by the analysis of balance sheet. Investors are highly demanding the cash assets so that they can look forward to the better outcome with growth and prosperity of the company.
Manuals as feature need and main objectives of balance sheet homework answers have explained the primary purposes and need of the balance sheet in the business area. Now, let’s get to know what the balance sheet is made of in details.
There is three main object of the balance sheet as stated in the earlier section of this article.
Two types follow under the object of an asset in the balance sheet.
Current type of assets
The company acquires the number of property over the timeframe for investment or operational usage. Current assets are the assets which give profit regarding cash within a year or a business cycle.
- Prepaid loan amounts
- Prepaid insurances
- Short term investments
- Receivable payments
Noncurrent or fixed assets
Noncurrent investments are the assets which tend to give benefit in the long term. Just like, we put money in Fixed Deposit (FD), we get the better return in the next future. The fixed assets are business land, stocks, bonds and so on.
Just as we understood the assets, there are similar two types of liabilities.
Any payment that has to be done within a year or a business cycle come under this category. For example, payable salaries, tax amounts.
Fixed or noncurrent liabilities
A payment which can take years to get out of it counted as fixed liabilities. Debt of bank is one kind of noncurrent liability.
In simple term of feature need and main objectives of balance sheet homework answers, the subtraction of liabilities from assets value is the equity of the business. Paid capital and retained earning amount make the investment and each shareholder is paid for the individual stock. The retained earnings are the amount business invest in itself is also a kind of equity.
The balance sheet is the most important document of the firm which represents the overall company and its future financial position so it should be generated with all the data and comprehended by professional for serving its actual purposes.
Feature need and main objectives of balance sheet homework answers manuals depict learning to write a balance sheet statement are important but, learning to read it and derive the information based on the statement is more essential than that. Because reading between the lines only can help the business to enhance and warn people to take steps carefully.