The concept of “balance” in Russian is borrowed and comes from the French “balance”, which literally means “scales”. Hence, the definition of balance in relation to economic content is a summary of the state of assets and liabilities of an enterprise or organization, as well as data on the sources of their formation at a particular point in time or for a certain period.
The axiomatic rule of any balance sheet is the coincidence in terms of assets and liabilities. This parameter is the main criterion for the correctness of the balance sheet. Structurally, the balance consists of separate articles, which reflect the metric values of indicators of assets and liabilities in the established units of measurement. These values characterize the amount of funds of the enterprise or organization, and also indicate the sources of their occurrence. The officials responsible for its preparation , as a rule, accountants, enter data on the movement of funds into the balance sheet of the company. These records are made in strict accordance with the established system of accounts.
After making entries, all articles are grouped, and the resulting groups form sections that reflect the movement of funds of the enterprise in the relevant categories: destination, urgency and turnover. Such structuring provides an opportunity for the accounting and financial services of the enterprise to keep under control the situation with revenues and expenses.
In order to more fully and clearly present the situation with the financial condition of the organization or enterprise, the balance sheet of the enterprise displays data in two series of values.
Some indicators reflect the financial condition of the enterprise at the beginning of the reporting period (fiscal or calendar year), while others contain information at the current moment of the reporting period. The terms of the values of assets and liabilities form the balance sheet currency, that is, those indicators that, as already mentioned, should be equal to each other.
As practice shows, the most difficult sections of the balance sheet are accounts receivable, which must be paid into the assets of the enterprise, and accounts payable, which refers to liabilities and reflects their values for the company at the moment of the reporting period.
Due to this structure and content, the balance sheet of the enterprise appears to be the most important document not only in financial statements, but also as an effective tool for analyzing and developing a strategy for the long-term development of the enterprise, including for the long term. Thanks to this document, it is possible to correctly distribute the expenditure of the enterprise’s funds, regulate income and expenses, pay taxes and other payments established by law in a timely and full manner.
A special place not only in the system of accounting and reporting documentation, but also among the resources of a full analysis of the state of the enterprise is played by the balance of fixed assets (PF). This document gives an idea of the size of the funds of the enterprise, their structure and condition. The significance of this balance cannot be overestimated, since it serves as the basis for determining all national wealth. The data in the balance sheet are reflected in cash and are structured by indicators of growth rates, PF purpose, industry sector. An important part of the balance sheet is the reflection of the state of fixed assets by ownership. The balance in question is drawn up according to two parameters:
- the initial cost of PF;
- the full cost excluding depreciation, that is, the depreciation cost of this fixed asset.
In a word, the balance sheet of an enterprise is an absolutely necessary document for organizing enterprise development planning, taking into account the efficiency of current production and forecasting reproduction, research and analysis of the state of fixed assets and capital investments.