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Features Of Balance Sheet Essay

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Chapter I
Introduction of Finance
Finance is not a foreign language, which can be understood only by those who have studied it for years. Everyone who works in today’s world has a basic understanding of the term finance. The day to day transactions of comparing prices, writing cheques to pay for purchases or sales, using credit cards for payments and purchase of goods and services and maintaining a bank account are all considered as financial activities. In the present world everyone has a bank account which will help them to save their money and use for different purposes in there day to day life. It is a field that deals with the allocation of assets and liabilities over a certain time under some terms and conditions of certainty and uncertainty. It can also be said as the science of money management. The main point in finance is the time value of money, which states that power of purchase of one unit of currency can …show more content…

A balance sheet is prepared only after the completion of the trading and profit and loss account because the net profit or net loss, as shown by the trading and profit and loss account is to be adjusted in the capital of the proprietor in the balance sheet. ii. A balance sheet is prepared with the help of all the balances of real and personal accounts appearing in the trial balance and the various adjustments made at the time of the preparation of final accounts. iii. The arrangement of debit and credit balances in a balance sheet is just the reverse of a ledger account, debit balances appear on the left hand side and credit balances on the right hand side. In a balance sheet debit balances appear on the assets side and credit balances appear on the liabilities side. iv. The balance sheet is prepared as on a particular date and not for a particular period.
v. The two sides of the balance sheet must agree, i.e., must balance. It is for this reason that the statement of assets and liabilities is called a balance

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