Balance Sheet
A balance sheet is simply a list of all the balance of assets and
the liabilities and the investments of the company. In a traditional
Thus, the assets are shown on the left side of the page
Liabilities on the right side of the page. There are always two
Aspects to each event, select the equilibrium in the balance sheet;
this is because the actual balance of the constructed
Accounting equation.
There aremany problems arising from the balance sheet presentation
and can lead to difficulties in the analysis. First, most assets are valued at
Costs, we can not determine the market value or replacement value
many assets and should not assume that their total assets
compensates for this current assessment. Secondly, different methods are
used for the valuation of assets in both the short and long-term assets
Assessment. A third and different type of problems is thatnot
All items of value to the firm are included as assets. For example,
Properties such as good staff, excellent management and a
well-chosen location does not appear in the balance sheet. In the same
V., refer to the pension liabilities and risks can also be displayed
in the balance sheet. These problems do not balance analysis
impossible. They are meant simply that is a qualitative case
quantitative ratio and trend analysis, in appliedto
incorporate the impact of these problem areas.
Profit and loss account
This is a statement that the records (the profit of the company whether
all received or not) as well as the costs of the company (whether
all paid or not). It determines what the profit or loss of
Operation is for a specified period, by subtracting all the costs of
Income.
The problem with the P & L is that at the end of the year is the profit
no real money. This isbecause parts of the profit and loss account
assumptions together.
Cash Flow Statement
In contrast to the P & L, cash flow statement has nothing to do with the income
and expenditure, but everything to do with money flowing into and out of the
the business. Cash flow has nothing to do with profit, they are two
different types of approaches. Cash flow is primarily concerned with cash
Balance at the end of a specified period, for example, every month.
There is an argument thatCash flow statements are more useful then the
other two statements (balance sheet and profit and loss account). I
can understand why a person argue that that is because many may
Reasons such as:
A P & L statement can be a positive number at the end of
certain period, but that does not mean the company has made
Attributable profit in the form of cash to the fact that parts of the income statement
assumptions together. For example, the business of adoption isthat
a policyholder if they have not paid. But at the P & L, it
will show that the company has paid the insurance, with the profit
Number will be different. Where, as in the statement of cash flows, the
Transaction is recorded after the event has taken place. The soil
is that, regardless of the transaction takes place or not
P & L statement is executed, the transaction has or will take place.
Like the income statement, balance sheet is also Assumptions.
For example, as mentioned above, the assets are valued at cost, and a
may not be able to determine the value of the assets in the future,
Assumptions are therefore relevant to the valuation of assets.
In contrast to the income statement and balance sheet, cash flow statement was
Information implies that an adequate picture of the representation
Company's liquidity and financial flexibility.
The balance sheet and income statement are used to evaluate> Financial
Situation of the company but can be misleading, because the only parts
the financial activities are recorded in which the cash flow --
Statement presents the reader with additional information that may be the
useful.
Since both balance sheet and income statement data are from the reserves concept it
is difficult for the user of accounts to examine whether a
Company has a good cash management system, which is very important
the success of theUnit.
It may be that the cash flow statement transactions, which presents
has occurred, compared to the P & L and the balance sheet when
Transactions are expected to take place. It is better to use all
Statements together present a fuller picture of the company to the
Users of the accounts. As the P & L and balance sheet, cash flow
Explanation has some shortcomings. For example, cash can be manipulated
as a business, you are required to juggle paymentswhen
a problem, so the cash flow available to make and thus
Manipulation can take place. The technical side of the cash flow
Statements has room for improvement. The requirements, both
Revenue and Expenditure under the same section often to a
Declaration, which is interspersed with clips and therefore difficult to
understand.
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