Is the balance more important than the profit and loss account?

May 25, 2018 | By admin4u | Filed in: Uncategorized.

Before answering this question, I will disclose to You both the Ownership Statement and the joint observations on the balance sheet and the

International Financial Reporting Standards (IFRS)

The income statement summarizes the results and expenditures of organizations for a given period. Historically, this was the first report that looked at users of financial statements (if not the only report) to find out whether the deal is investing.

For a number of non-financial entities, there is no point in making the balance in the balance sheet so that they are tied to the only report that is easy to read, namely the profit and loss statement. The assets and liabilities are too complicated to understand.

Over the last ten years, this has changed so much to give readers and users much more confidence in the balance than the revenue statement. This "discrimination", which falls on the profit and loss account, is so serious that some investors should be encouraged to ignore the profit and loss account.

Why is this so? It is possible that a large number of revenue streams of corrupt companies that have now been abolished have been reported, which are very lucrative figures, while these companies are heavily indebted (technically insolvent) or technically insolvent. In addition, high earnings are no guarantee of your bankruptcy.

Historically, a profit statement was first made, and the second balance sheet. The balance became a "waste bin" for every item that could not balance the books. IFRS is now implementing the reverse, making the balance for the first time, and the statement of revenue will now be "garbage truck"!

The first, method of the balance has more to do with accurate reporting than any other and supported Many Accounting Experts. The Accounting Equity, Asset Liabilities = Equity, the real bottom line, is not the "gain". The capital increase is interesting for all investors. Every new business, actually, is based on the "balance". Capital investment, purchase of loans, acquisition of inventory and opening of a bank account. Only once all of the above have been created will the business begin to generate revenue and generate costs

Balance Audit

Balance Sheet items are clearly and first made. Accountants check tangible assets, current assets, short-term liabilities, loans and investments. Using the asset-source formula, you are quick to evaluate your capital balance. If the equity stock is retained to a lesser extent by the shareholders' funds or equity, the gain is quickly determined, even before earnings or expense items are examined.

The Profit and Loss Statement should be favored by "bottom up" .The gain or loss should be adjusted accordingly (added), the expense, and the revenue number should be determined. If any deviation is identified, it is at this moment a revenue error , and not a balance The balance sheet data proved to be sacred

Book entries are not always accurate and a properly prepared balance sheet reveals this fact.If the revenue data seems to be accurate, but differences are still identified, look at the accumulated or withholding You can not just tell where you went in the last year, but also in previous years?

I need more to say? No further explanation is needed. Balance King!

Source by Sean Goss


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