Balance Sheet Meaning : Now I explain details balance sheet example which you can easily understand as well as i will explain trail balance and i will explain different between balance sheet and trail balance with example. Please go through the below example.
Balance Sheet Meaning
Balance Sheet Meaning : Balance sheet shows company financial position at the ending month or year. The Balance sheet is a financial statement the shows a company asset , liability and shareholders equity at the month or year. If you read balance sheet you will get know what is company position, how much company liability, how much assets of the company.
Please check the formula of the balance sheet meaning :
You go through basic equation to make a balance sheet meaning.
Company Assets = Liabilities + owner equity
The company balance sheet has three part :
1. Assets : which are the resources owned
2. Liabilities : which are the company debts.
3. Owner Equity : which is the contribution by shareholders and company earning.
What important terms used in balance sheet / balance sheet meaning :
Current assets and fixed assets.
Tangible assets and Intangible assets.
Equity : equity refers to claim held by
An owner only.
A creditor only,
An owner and the creditor both.
Long term liability or fixed liability
What is the difference between a trial balance and balance sheet ?
Balance Sheet Meaning / Trail Balance Meaning : Trail Balance is list of balance from the ledger account while balance sheet is a statement of assets and liabilities.
Trail Balance contains balances of all personal, real and nominal accounts, while balance sheet contains balance of only those personal and real account which represent assets and liabilities.
Trail Balance is prepared before preparation of profit and loss account , while balance sheet is prepared after the preparation of profit and loss account.
Trail Balance is prepared to check the arithmetical accuracy of posting into ledger while balance sheet is prepared to indicate the financial position of the business on a particular date.
What Is Trail Balance ?
Trial balance is a list of all balance standing on the ledger account of a firm at any given time. Following are the most important characteristics of a trial balance.
Trail balance statement prepared in tabular form.
It has two columns : one for debit balance and another for credit balance.
Closing balance as shown by ledger accounts are shown in the statement.
Trail balance is not an account, this is only a statement of balance.
The prepared on the normal of balanced accounts.
The way of verifying the arithmetical accuracy of entries made in the ledger account.
It helps in preparation of Profit and Loss account and Balance Sheet at the end of the period which exhibit the financial position of the firm.
Lets Understand What Is Cost Management
Cost Management in the control of actual or forecaster cost incurred by a business. This is greatest useful as a formalized process, using a few or all of the following steps :
Collect information about current and projected costs. This typically comes form general ledger for actual costs, but the information can also be compiled through an activity-based costing system or some less formal collection methodology. Projected costs approach from comparison to related projects or products, or estimate based on projected bills of material.
Review the collected information to see if costs can be reduces or avoided entirely. This can included the separation of costs into fixed, variable, and mixed costs, reviewing cost on a tried line, analyzing the impact on bottleneck operation, and comparing costs to those of abenhmark companies and balance sheet meaning need to understand of whole concept of accounting.
Reporting the results of the analysis to management, with recommended Acton.
Set up controls to ensure that changing imposed by management are adhered to in the method planned.
Monitoring any changes imposed by management as a result of this analysis, to see thaw the alterations have modified the cost profile of the business. If a business is try to handle costs associated with hope activities (such as the plan of a new manufactured goods or the construction of a new headquarters building) then the cost management activities are somewhat different. Any of the following activity could be followed.
Using target costing to continually estimate costs as features are added to or subtracted for a project (usually a new product).
Using milestone review to compare the costs originally estimated to be incurred to actual costs incurred, these review can sometimes result in the outright cancellation of projects. Cost management can also involve a simple monitoring function, where there is no immediate need to make alternations. In this case, the following approaches to cost management cab be followed :
Using variance analysis to highlight any difference between incurred costs and budgeted costs.
Using exception analysis to highlight only those variance from budgeted costs that exceed a certain threshold. Using trend analysis to note long-term changes in certain cost and balance sheet meaning is easily understand of accounting.
In short, cost management is a board topic that encompasses a variety of data collection, analysis reporting, and control activity. Every company wanting to remain profitable over the long term will need is spend a considerable proportion of its time attending to cost management activities.
Further i will give you accounting job interview question and answer. Those who searching for job you much apply all job website like naukri.com and timesjobs.com etc. And Please go through the Golden Rules of Accounting and Basic Accounting terms.