Each business entity generates financial statements for its activities. One of its integral elements is the balance sheet. The balance sheet items characterize the financial and property status of the enterprise at the reporting date. Consider the document in more detail.
Balance sheet sections
Section articles reflect the movement of property and cash on accounting accounts. Data entry into the documentation is carried out in accordance with international rules. Mandatory elements are the asset and liability balance. The balance sheet items reflect what funds are used by the company, what are its obligations. The document also shows the organization’s own funds. All resources available to the enterprise can be provided either at the expense of the owners' capital or from borrowed funds. The items in the balance sheet asset should reflect the amount equal to the aggregate claims of owners and creditors in monetary terms.
Method of forming
There are various types of balance sheets. They vary depending on the composition, purpose and other criteria. According to the method of formation distinguish:
- Balance sheet balance sheet. Balance items characterize the property of the subject and the sources of its formation in monetary terms at a certain date. This document is prepared by calculating the balance (balance) of accounts.
- Current balance sheet. The balance sheet items, except for balances and sources of property at the start and end dates of the period, reflect information about their movement over time. This document is considered interim.
Frequency of compilation
By this criterion distinguish:
- Initial (opening) balance sheet. Balance items are formed at the first stages of the enterprise. They show the composition of the property of the organization. As a rule, it is presented in the form of contributions. Balance sheet liability items show the sources of the property.
- Final document. It reflects the results of production and financial activities of the company for a specific period.
- Annual balance sheet. It is also considered final. However, unlike the previous one, it is compiled based on the results of the reporting year and acts as a justification for opening accounts in the new period.
- Interim balance. It is formed in a shorter period than the reporting year. As a rule, it appears as a shortened form of a regular document. Meanwhile, most of the standards do not prohibit drawing up a full interim balance.
- Sanitized document. It is formed in cases when the issue of declaring an enterprise insolvent (bankrupt) is being decided.
- Liquidation balance sheet. This document is formed to reflect the property status of the organization upon termination of its work as a legal entity.
Readiness degree
The classification by this criterion is as follows:
- Preliminary balance. It is also called provisional. This balance sheet is formed in advance at the end of the period, taking into account the alleged changes in the property condition of the enterprise.
- Final document. It is formed at the end of a specific period and reflects the results of the production and financial activities of the company.
Degree of consolidation
Depending on this criterion, distinguish:
- A single document. It shows information on the activities of one enterprise.
- Consolidated document. The content of the balance sheet items in this case is formed from the performance of the parent and subsidiary companies as a whole. The mutual turnover of the latter is excluded from this report.
- Separation balance. It is formed when the company is divided into several legal entities or when a certain share is allocated from the total capital to create a new company. The separation balance sheet should contain a provision on the succession of all obligations of the reorganized legal entity.
Other species
Depending on the source, balances are allocated:
- Inventory. They are compiled in accordance with the inventory records of property, settlement assets, liabilities.
- Book. They are formed according to information from books of accounting without performing an inventory.
If the document contains regulatory articles, then it is called the gross balance, if they are absent, respectively, the net balance. There is also a classification by ownership of companies. So, there are reporting documents for state, private, public, joint, municipal mixed organizations.
Key concepts
Before considering the design of articles of the balance sheet, it is necessary to clarify the general principles of the document. The report is presented in the form of a bilateral table. In each line, the name of the accounting object is indicated, its value as of the date of preparation of the document is given. The main items of the balance sheet are distributed according to certain rules. Obligations and equity of the enterprise are attributed to the right. Assets, respectively, are indicated on the left. Economic publications explain these categories:
- Liabilities. They represent the company's debt at the reporting date. It is formed in connection with the implementation by the company of its activities, the calculations of which can provoke an outflow of capital.
- Assets - household assets. The company obtained control over them in connection with completed business operations. These funds may bring future profit to the company.
- Capital. It is presented in the form of investments of owners and income accumulated over the entire life of the company.
Nuances
As a rule, a document is prepared at the reporting date (at the end of the month, year, quarter). But it should be understood that in the methodological plan, the balance sheet, acting as a generalization of information about the value of the property of the enterprise, can be formed for any number and period, as often as it is considered necessary. It can be made even at the end of each business operation. It is also necessary to take into account that the principle of conservation is applicable when reporting. This means that no article can arise out of nowhere. Balance sheet indicators are the results of specific actions of the organization. Synchronously with the funds in one part of the table, the sources of their occurrence in another are reflected. The result of an asset is always equal to the result of a liability. Often a portion of the funds is contributed by a non-owner. In this case, equality takes the following form:
Assets = liabilities + capital.
The sums of both parts of the equality coincide, since they describe the same objects from different sides. The final result is called the "currency" or "digit" of the document.
Composition
All types of funds are included in assets:
- Equipment.
- Building.
- Inventory and inventory.
- Transport.
- Customer debt.
- Money for r / s, etc.
Obligations are formed from the finances that an enterprise must repay for loans, services, goods, etc. The obligation of equal amounts of both columns of the table does not depend on the number of transactions performed. The basis of compliance is the principle of double entry. It involves the reflection of information about the operation in at least two accounts. As a rule, assets and liabilities are divided into long-term and current. In international practice, they are listed by degree of liquidity.
Balance Sheet Items: Transcript
The results are formed when processing a large volume of business operations. Structurally, they are combined into specific groups depending on their functions and nature. Material items of the balance sheet are separately presented. Decryption of non-essential information is carried out comprehensively. The correct preparation of the reporting document involves:
- Proper grouping of processes according to their nature.
- Full coverage of the results and performance of the enterprise.
- Correct reflection of operations. By the way they are displayed, it should be clear not only the state of the company’s finances, but also the result.
The main items of the balance sheet are as follows:
- OS
- Investment property.
- Financial assets.
- Stocks.
- Biological assets.
- Investments.
- Trade and other payables / receivables.
- Assets and liabilities for sale.
- Cash and cash equivalents.
- Assets and liabilities for tax deductions (deferred and current).
- Reserves and capital, minority interest.
- Financial and estimated liabilities.
- NMA.
The article 1 of the balance sheet indicated in the list reflects the fixed assets of the company. They include everything that the company uses directly in its production or other households. activities. Additional articles are provided in the balance sheet when necessary for a reliable and complete reflection of the financial condition of the company. To solve this issue, a series of data is being studied. In particular, the assessment of the balance sheet items by:
- Liquidity funds.
- The content of the assets.
- Functions of funds within the enterprise.
- Size, content, terms of obligations.
Features of the study of information
Analysis of balance sheet items can be performed in different ways:
- Directly on the document. However, the composition of the articles is not subject to change.
- The study of compacted comparative analytics through the aggregation of some elements that are homogeneous in composition.
- A study of the adjusted document on the inflation index. After this, articles are aggregated in the corresponding analytical sections.
The first method is considered quite time-consuming and inefficient. In this case, the evaluation of the balance sheet items involves the calculation of many results. In this regard, it is not always possible to highlight the main trends in the financial position of the company. The analytical balance summarizes and systematizes the calculations that are usually made when reading a document. This method covers a huge amount of results. They characterize the statistics and dynamics of the state of finance of the company. In fact, such a balance includes both horizontal and vertical indicators.
Main stages
There are 6 stages of balance analysis. They include the study of:
- Speakers and structures.
- The financial stability of the company.
- Liquidity balance, solvency of the enterprise.
- The condition of the funds.
- Business activity.
- The financial condition of the company.
Study of structure and dynamics
One of the key areas of analysis is the study of horizontal and vertical results. Within the framework of these procedures, the structural dynamics and specific gravity of specific groups of objects are investigated. Vertical and horizontal analyzes complement each other. In practice, as a rule, special tables are formed. They analyze both the structure of the entire report and the dynamics of its individual figures. Vertical study involves the use of relative amounts. It shows the proportion of a single article in the balance sheet. As an obligatory element, dynamic series of quantities act. With their help, you can track and predict certain structural changes in the means and sources of their coverage. As a result, there is a transition to relative values. This makes it possible to perform a comparative analysis of companies in accordance with their industry specifics and other characteristics. Horizontal values are formed by constructing tables of absolute results of changes in the amounts and relative figures of their decrease / growth.
Financial stability
Its absolute indicators are determined by the presence of:
- Own real capital. It is presented as net assets.
- Current assets and real working capital.
Relative values are stability factors.
Liquidity and solvency
Working capital should be at the enterprise in such an amount that is potentially enough to pay off obligations in the short term. In this case, they speak of liquidity balance. She acts as the basis of the solvency of the enterprise. Liquidity assessment can be performed in various ways, including the calculation of its main ratios.
Condition of funds
When analyzing the balance sheet, it is necessary to study the composition, efficiency, structure of the use of current and non-current assets. In this work, special quantities are used. These, in particular, include indicators of turnover and profitability.
Business Intensity
Her assessment can be carried out:
- By the degree of effectiveness of the use of resources (the dynamics and level of capital productivity, profitability, productivity, etc.). The most important values include the turnover of capital and assets.
- By definition of the rate of decrease or growth of profit, turnover, etc.
- By special indicators reflecting business activity. For example, they include the coefficient of sustainability of growth, investment activity, and the ability to self-finance.
Diagnostics of the state of finance is carried out by calculating a variety of coefficients, discriminant analysis. This can be done, for example, using the Altman model or other mathematical / economic models or formulas.
Conclusion
In the Russian Federation, the balance sheet form and the rules for its compilation for legal entities (except for budgetary and credit enterprises) are regulated by PBU 4/99. The procedure for the formation of a document by banks is regulated by the Regulation of the Central Bank. Assets and liabilities should be shown divided by long- and short-term depending on the circulation period (maturity). Although the liquidity statements (for banks) do not include such a classification. Liabilities and assets are reflected as short-term if their repayment (circulation) period is not more than 12 months. after the reporting date or the duration of the operating cycle, if it is more than a year. All other values show as long-term. The presentation of the document is regulated by international standards IFRS-1. The requirements are quite flexible and can be applied to different enterprises, regardless of their size and specifics of activity. The reflection of current information about the property, which is managed by an economic entity, in the form of a balance sheet acts as one of the fundamental accounting methods. The document does not show the movement of funds and the facts of specific operations. It reflects the state of the finance of the enterprise for a certain period. The essence of the balance is that information on the value of the company's property for a specific date is grouped in a special way, due to which it is possible to analyze and predict the situation in the future.