Blog

Financial Statements

Financial statements are very crucial to understand the financial performance of the company. These are instrumental and fundamental to assess and make a detailed analysis of any company. Here in this article I am giving some insights about these which will help readers to understand them. Balance Sheet A balance sheet is a financial statement as on date that reports company’s assets, liabilities, equity or net worth of the company Equation of Balance sheet: Assets= Liabilities + Owner’s equity Note: If liabilities are more than assets then owner’s equity will be in negative which indicates the company is suffering from poor financial health Potential stakeholders of balance sheet: Potential shareholders whether to invest or not in the company Banks/ Lenders to assess the financial health of the company before processing any loans to companies Regulatory authorities to scrutinize a company’s financial health Financial Ratios Important financial ratios calculated based on…

Importance of the General Ledger in Accounting

The general ledger holds a pivotal role in accounting, acting as the central repository for financial data. It enables businesses to track and analyze their financial health accurately. Components of a General Ledger Assets Assets represent what a company owns, including cash, inventory, and property. The general ledger categorizes these for a clear overview of a company’s resources. Liabilities Liabilities encompass a company’s obligations, such as loans and outstanding bills. The general ledger helps in monitoring and managing these financial responsibilities. Equity Equity reflects the ownership interests in a company. The general ledger details changes in equity over time, providing insights into the company’s financial structure. Revenue Revenue entries in the general ledger document the income generated by the company. It’s a crucial aspect for assessing profitability. Expenses Expenses cover the costs incurred in running a business. The general ledger records these outflows, aiding in expense management and budgeting. Setting…