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In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business partnership, a corporation, private limited company or other organization such as government or not-for-profit entity.
Since the balance sheet is founded on the principles of the accounting equation, this equation can also be said to be responsible for estimating the net worth of an entire company. The fundamental components of the accounting equation include the calculation of both company holdings and company debts; thus, it allows owners to gauge the total ...
Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently." [2] Financial statements may be used by users for different purposes:
Sections 209 to 220 of the Indian Companies Act, 2013 deal with legal provisions relating to preparation and presentation of final accounts by companies. Section 210 deals with the preparation of final accounts by companies, while section 211 deals with the form and the contents of the balance sheet and the profit and loss account.
A consolidated financial statement (CFS) is the "financial statement of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent company and its subsidiaries are presented as those of a single economic entity", according to the definitions stated in International Accounting Standard 27, "Consolidated and separate financial statements", and International ...
Cash and cash equivalents are listed on balance sheet as "current assets" and its value changes when different transactions are occurred. These changes are called "cash flows" and they are recorded on accounting ledger. For instance, if a company spends $300 on purchasing goods, this is recorded as $300 increase to its supplies and decrease in ...
The recording of the liability in the entity's balance sheet is matched to an appropriate expense account on the entity's income statement. In U.S. Generally Accepted Accounting Principles (U.S. GAAP), a provision is an expense. Thus, "Provision for Income Taxes" is an expense in U.S. GAAP but a liability in IFRS.
In accounting, reconciliation is the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement.It is a general practice for businesses to create their balance sheet at the end of the financial year as it denotes the state of finances for that period.
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