Notes On The Balance Sheet Essay

1274 Words May 13th, 2016 null Page
Roger practices his LLC as a sole proprietor which means he has no official financial records. As a CPA he does prepare multitudes of financial statements for other companies. In order for financial statements to be considered and reliable they have to be auditable. They have to be assemble by the GAAP standards. While interning with Roger locks I learned how to record transactions in the journals and had to prepare and compare financial statements to make sure everything matched up and get them ready for Roger to present to his clients. One of the financial statements we prepared was the balance sheet. The balance sheet serves almost as a snapshot of an entities financials for a specific date. The exact balances of the different elements of the balance sheet change on a daily basis. The balance sheet formula is Assets = liabilities + owners’ equity (net worth). The balance sheet shows third parties such as investors and potential clients/suppliers your sources of funds (liabilities and owners’ equity) and your allocation of funds (assets). From the balance sheet they can evaluate your companies basic financial position. Such as how much debt you have compared to your assets and your ability to pay off your debt. Investors and banks are interested in this kind of information for many reasons. Such as, if your amount of debt exceeds your amount of assets it could be a good prediction that your company will have trouble continuing. Another reason outside entities would like…

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