Balance Sheet: Crucial To The Business Owner
The balance sheet of any company or organization is an often unnoticed and misunderstood financial statement. Besides, it’s often considered less important as the income statement shows profit and loss (P/L statement), which is where the action is in the financial statement. But, still, the balance sheet is very vital and needs to get the proper attention. Therefore, you must hire a company that comes in the list of Top CA Firms in Pune. Some of the important Focus Areas we mention to our client when we review the balance sheet every month.
Do you need to point out “Does the balance make sense as well as have we reconciled these accounts to the most recent bank statements? Also, “Are the timing differences recent and explainable or are they unidentified and old?
Account receivables often refer as “money owed to a company by its debtors. Do we have an aging report that lists every open invoice and the days unpaid by customers? Do we write off uncollected receivables after six months? Is there an effective and consistent process to make sure the older receivables are followed-up and collected?
This is defined as “Money owed by a company to its creditors. Do we have an aging report that lists each open seller and the days unpaid? Apart from this, Have we scheduled payments for the next two weeks based upon estimated incoming cash against the oldest payables?
Notes Payable & Credit Cards Payable
Are all of the notes payable to the bank or other creditors recorded on the financial statements? Also, o the balances shown reflect the current principle because of the debt? And, Do we have all credit cards listed with the balances owed stated properly?
Inventory or Stock defined as “A complete list of items like property, goods in stock, or the contents of a building. ”Do we know that the quantity on hand is properly stated based on inspection or physical count? Have we identified and reserved for inventory that is obsolete or damaged? Have we found out that the costs assigned to each inventory item are consistent and reasonable with the current costs?
Some other Current Assets
IN general, this is pre-paid assets like pre-paid insurance or deposits held for some short period of time. Are the balances amortized to their current value? Fixed assets- Are we properly depreciating this equipment? Also, Do we have all our manufacturing equipment & tools, trucks and office equipment identified and recorded on each asset at cost?