The Balance Sheet - General

AuthorVern Krishna
Chapter : The Balance Sheet —
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.

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