Balance sheet is a snap shot of a company’s
financial condition and is the only statement which applies to a single point
in time of the fiscal year. It also informs the creditor what company owns as
well as what it owes to the other parties. It helps the banker to decide to
determine whether or not a company qualifies for additional loans. External
parties such as government, investors, competitors, suppliers etc. are also
interested in the balance sheet.
The
class begins by asking the students to take out a sheet of paper and form two lists:
“What I Own” and “What I Owe.” They are also asked to think about how they
would
value what they owned if they were asked to do so. Students are given three to
five
minutes to complete this task.
Once
the students has the opportunity to write down two lists, the instructor
forms
a common list in the front of the room by asking the students what they listed.
Common
items on the “own” list include cash, a wide range of electronics, clothes,
house,
investments, etc. Typical items on the “owe” list are student loans, car loans,
and mortgages.
http://www.investorwords.com/51/accounts_payable.html
A balance sheet is like a sneak peek to a particular business. By understanding it we should be able to tell how well it is performing. Having a balance sheet also helps an entrepreneur to inspect on areas that might need to be improved on.
ReplyDeleteMatthew Engquist