The ground rules, concepts and conventions

The balance sheet is a part of accounting and accounting is certainly not an exact science. There is a considerable scope for interpretation and educated guesswork. If this were to go on unbridled no one inside or outside the business would place any reliance on the figures, so certain ground rules have been laid down by the profession to help get a level of consistency into accounting information.

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Balance sheet.

The balance sheet reflects the assets and liabilities of the company at a specific point in time. Shows what the company owned on a particular date when the balance sheet was built, and what it had a value. Assets must always be equal to the sum of liabilities and equity of the company. You must also realize, that all financial statements in its wake are reflected in the balance sheet.

Have you noticed one thing?

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