Accounting is a system for collecting, summarizing, analyzing and reporting information about an organization in monetary terms. The end product of commercial accounting software is the annual financial statement, consisting of a balance sheet, income statement and statement of changes. These statements are therefore the source of information from which conclusions can be drawn about the business activities of a company. The analysis and interpretation of financial statements would depend on the type and nature of the information available.
When it comes to business accounting software, the balance sheet is a significant financial statement of a company. In fact, it is called the basic accounting report. Other terms used to describe these financial statements are balance sheet or management report. As the name suggests, the balance sheet provides information about the financial position of a company at a specific point in time. It can be visualized as a snapshot of a company’s financial status. The financial position of the company is only valid for one day – the reference date. It must be different on a preceding or following day.
A company’s financial condition, as disclosed on its balance sheet, relates to its resources and obligations and the ownership interest in the company by its owners. From an operational point of view, the balance sheet contains information about assets, liabilities and equity. It can be presented in two forms: account form or report form. It is usually presented in account form. In the reporting form, a step-by-step balance sheet is prepared with assets listed at the top, followed by liabilities and equity. The content of the balance sheet, in whatever form, consists of the company’s assets and the means by which they were financed, i.e. liabilities and equity.