The Importance of The Balance Sheet

The Importance of The Balance Sheet

The Importance of the balance Sheet

During the ordinary course of business some of the company's purchases will be outstanding accounts and are current liabilities entered on the balance sheet as 'Trade creditors'. On the other hand some of the company's customers will be in debt for goods supplied to them and these will appear on the assets side as 'Trade debtors'.

Some of the retained profits will be set aside to meet future taxation. The balance sheet would then appear as follows:

Liabilities Assets


Preference shares ....Land, buildings, etc.

Ordinary shares ....CURRENT ASSETS:

CAPITAL. RESERVES Stock-in-trade ......

REVENUE RESERVES Investments ........

FUTURE TAXATION Trade Debtors ......

CURRENT LIABILITIES: Cash in hand at bank

Trade creditors


Read more on Uncovering A Share's 'real Value' in 2016

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