The Balance Sheet - General

• Author: Vern Krishna
• Pages: 128-139

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Chapter : The Balance Sheet —

General

A. OVERVIEW

Accounting is concerned with assimilating and disseminating nancial

information for various purposes and users. e “nancial statements”

assemble data derived from accounting records, which summarize an

entity’s economic resources and sources of nancing at a point in

time and its operations for a period of time. e overarching object-

ive of statement preparation is to provide full and fair disclosure of

relevant and material information of the enterprise’s nancial pos-

ition and activities.

ere are ve components to a set of nancial statements:

) e Balance Sheet (also known as a Statement of Financial Position);

) e Income Statement;

) e Statement of Cash Flows;

) e Statement of Shareholders’ Equity; and

) Notes to the Statements.

Each of these components discloses aspects of nancial information

about an entity, but from dierent perspectives.

e fundamental principles underlying these statements are rea-

sonably uniform between entities and industries. us, when reduced

to a common size, they facilitate interpretation and analysis, regard-

less of the size of the entity, the nature of its business, or its location.