AG Bookkeeping Services LLC

A balance sheet is a snapshot of a business’ financial condition at a specific moment in time, usually at the close of an accounting period. A balance sheet comprises assets, liabilities, and owners’ or stockholders’ equity. Assets and liabilities are divided into short- and long-term obligations including cash accounts such as checking, money market, or government securities. At any given time, assets must equal liabilities plus owners’ equity. An asset is anything the business owns that has monetary value. Liabilities are the claims of creditors against the assets of the business. What is a balance sheet used for?   A balance sheet helps a small business owner quickly get a handle on the financial strength and capabilities of the business. Is the business in a position to expand? Can the business easily handle the normal financial ebbs and flows of revenues and expenses? Or should the business take immediate steps to bolster cash reserves? Balance sheets can identify and an...

Financial statements are typically used to paint a picture of the financial health of the company. However, as credit professionals are well aware, numbers can sometimes be manipulated. Thus, it is important to have statements that are audited by an independent accounting firm. Financial statements come in three levels: 1 . Audited statements are compiled by an independent accounting firm from company records. This is the preferred type of statement. The audit firm signs off on the statements when the audit is complete. They typically state that the accounting conforms to generally accepted accounting principles ( GAAP ). This is referred to as an unqualified and it is what credit managers ideally want to receive. If the accounting firm disagrees with the way the company handled one or more transactions believing the issue does not conform to GAAP, it will give a qualified statement. Companies generally will go to extreme lengths to make sure that their auditors give an unqualified ...