Accounting is a system of collecting, summarizing, analyzing, and reporting, in monetary terms, information about an organization. The end product of business accounting software is the financial statements consisting of the balance sheet, profit and loss account, and statement of changes in financial position. These statements are therefore the source of information from which conclusions about a company’s operations can be drawn. The analysis and interpretation of the financial statements would depend on the nature and type of information available.
When talking about business accounting software, the balance sheet is an important financial statement of a company. In fact, it is called a fundamental accounting report. Other terms to describe this financial statement are statement of financial position or statement of position. As the name suggests, the balance sheet provides information about the financial situation/position of a company at a given time. It can be viewed as a snapshot of a company’s financial status. The financial position of the company is valid for a single day, the reference day. On a day before or after, it is bound to be different.
The financial position of a company revealed by the balance sheet refers to its resources and liabilities and the interest of its owners in the business. In operational terms, the balance sheet contains information regarding assets, liabilities, and shareholders’ equity. It can be submitted in either of two forms: account form or report form. It usually comes in the form of an account. On the reporting form, a step-by-step balance sheet is prepared, listing assets at the top, followed by liabilities and owners’ equity. The contents of the balance sheet, in whatever form it is presented, consist of the assets of the company and the means by which they have been financed, that is, the liabilities and the owners’ equity.