The main accounting document used to evaluate the performance of any company is the balance sheet. Its main principle is to maintain a balance between an asset and a liability. The structure of the balance sheet depends on the sphere of activity of the enterprise, but is formed according to the general principle: in the left part - assets, in the right - liabilities. Lines with the corresponding serial number reflect individual articles. It is on their basis that an analysis of the company’s activities is carried out . What are liabilities and balance sheet assets is required to know any person related to the economic sphere.
Balance
To evaluate the activities of the enterprise by the management, credit organizations, owners, shareholders, fiscal state bodies, the main accounting document is used - form No. 1 of any reporting. The balance sheet reflects all property, liabilities, capital, cash and working capital of the organization for a certain period. The monetary assessment of each article makes it possible to analyze the assets and liabilities of the organization. The principle of equilibrium, regulated by double entry, ensures the balance of two sides of the balance, each of which is systematized by type of liquidity of funds. What are the liabilities of the enterprise, you can learn from the right side of the table, for this you need to study its structure.
Normative acts (Tax Code) stipulate a standard form of balance sheet, its sections and the procedure for filling out each article. To decrypt this reporting form, there are additional applications that reflect specific information for each type of asset or liability and capital. Required details for filling:
- name of the organization (full, prescribed in the charter documents);
- relevant codes (TIN, OKVED, OKEY, OKOPF, OKFS);
- date of preparation and submission to the tax authorities;
- registration address of the organization.
Balance sheet structure
What are liabilities? Firstly, these are the funds reflected on the right side of the balance sheet. The passive has three main sections:
- Short-term liabilities.
- Long term duties.
- Capital and reserves. Each line or element of the liability reflects the funds of the enterprise, due to which the formation of the active part of the balance sheet occurs.
The question of what liabilities can be answered very simply - the capital of the organization. It may consist of borrowed funds (short-term or long-term liabilities) or equity (equity, reserve, additional paid-in capital, retained earnings of the previous period.). What is an asset? These are objects and means of production.
The structure of the left side of the balance sheet is as follows:
- Fixed assets.
- Current assets.
In each section, articles are written in order of greatest liquidity. All balance sheet figures are given in the table at the end and beginning of a certain reporting period, which contributes to the visual analysis at the time of compilation. To conduct comprehensive studies of the organization, an asset, like a liability, has applications (transcripts) for each article.
What are liabilities
The right side of the balance sheet reflects all sources of formation of the assets of the enterprise. In sum, these indicators give a liability, which in monetary terms shows the balance sheet currency. It is necessarily equal to the active part, i.e., the left side of the table. Translated from the Latin language, the word "passive" means "inactive". In fact, this type of enterprise resources is used to create assets, means of production, working capital, intangible and basic units of equipment involved in a closed production cycle. Under the concept of "liabilities" are suitable all types of capital of the organization, depending on the form of its organization (joint-stock, charter); financial liabilities of different maturities (loans, credits, bills) and own funds accumulated in the form of various funds (depreciation, reserve) (retained earnings for previous periods).
In accounting terminology, the term "total capital" is often used, this concept is identified with the liability and its currency. Also, the right side of the balance sheet in various sources may appear as the "obligations" of the enterprise.
Liability structure
All liabilities of an enterprise are classified in the following articles:
- Imaginary - such liabilities are reflected in accounting or tax accounting for a certain date to calculate the value of net assets, but are actually extinguished. Their timely identification will help to avoid double payment, that is, to maintain circulating enterprises without reducing their value. Imaginary obligations include: funds received as a loan from the owner of the company, reserves for future payments, debts of creditors with expired statutes of limitations, and others.
- Hidden - obligations that are virtually absent, but reflected in the composition of credit, tax or extra-budgetary payments. They can arise in the process of drawing up the balance in case of untimely write-off (reflection) in the accounting of the listed debts. The hidden liabilities include: deferred tax liabilities, charitable transfers, ineffective contracts or objects of non-productive infrastructure, repayment of debts of branches or subsidiaries (in case of undertaking the corresponding obligations) and others.
- Actual - actually existing and reflected in the balance sheet liabilities. They, in turn, are divided into current and long-term obligations to credit institutions, budgets of various levels, employees of the organization, founders or shareholders. The maturity of a liability is determined by the maturity date, which depends on the relevant contract. In the performance of actual obligations, the organization loses part of its own asset, which may be cash, fixed or circulating assets, finished goods, etc.
What are current liabilities
Any commercial or government organization attracts borrowed funds to carry out its activities. Liabilities that are due within a calendar year are called current. They are reflected in the liabilities side of the balance sheet, in the section “Short-term liabilities”. As a rule, they are fully secured by the availability of liquid assets at a specific date. Current liabilities include: arrears to employees on wages, liabilities to the budget, short-term loans, loans and borrowings, debts to suppliers of raw materials, materials and equipment (within the limits provided for by the contract). In order to understand what the current liabilities are in the balance sheet, it is necessary to refer to the lines of the fifth section “Short-term liabilities”. The following accounting accounts are grouped in it: 66, 60, 62, 75, 70, 69, 68.
What are long-term liabilities
For large-scale financial projects, organizations attract long-term borrowed funds. Their large specific gravity implies partial extinction over a long period of time. Long-term liabilities, or liabilities, are loans, loans, borrowings received for a period exceeding one year. They also include promissory notes and bonds issued by the company. As a guarantee of this category of liabilities, a credit institution, as a rule, accepts non-current assets of the enterprise. For the term of repayment of the loan, they are pledged, but at the same time continue to participate in production processes.
Bank liabilities
The methodology of accounting for a credit institution differs from the rules regulated by the Tax Code for other business entities. Therefore, it is worthwhile to dwell separately on the question of what is a bank liability. Capital is the main instrument for carrying out the activities of credit organizations. It is he who is a liability, the value of which is the currency of the bank balance. The higher this value, the more efficiently these funds are used. Each organization seeks to increase liabilities at the expense of its own and attracted funds. The composition of bank capital includes: authorized capital, income from the issue of securities, deposits of legal entities and individuals, profit from activities.
Liabilities analysis
To assess the liabilities and capital of the company used balance. The most common form of liability analysis is the study of its structure. Estimation of the mass fraction of long-term and short-term liabilities in its composition. At the same time, the amount of liquid assets that can serve to pay off debts in the reporting period and on a long-term basis is considered. The positive dynamics of the liability is the presence of a large amount of equity in the balance sheet structure. A serious warning for the management of the company when conducting a liability analysis is the large proportion of long-term liabilities, loss from operations, and the presence of overdue payables.