Simple , it helps you to organise things in proper manner.
Similarly balance it does the same thing it helps you to classify your sources of funds and application of funds i.e. Equity, Assets and Liabilities.
Sources of funds ( Equity and Liabilities) in one side and Application of Funds ( Assets ) in other side.
It gives about financial of a company and its operations. It reveals a company's liabilities, assets and owners' equity net worth.
What are the types of assets you own (current or non current ).what is the nature of your debt ( short term or long term )
It gives you information about
- Physical Assets (real estate, vehicles, office equipment, etc.)
- Non Physical Assets ( Goodwill, Patent etc )
- Own sources of funding(equity)
- Outside sources of fundings ( bank borrowings, debt market borrowings )
- Revenue you expect (accounts receivable)
- Expenses you expect to pay (accounts payable)
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we do some kind of reverse engineering to keep the dirt out.
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