Finalization of Balance Sheet, Tax Audit & Finalization of Balance Sheet, Tax Audit
Balance Sheet A balance sheet is one of the three annual financial statements that companies are...
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![Page 1: Balance Sheet A balance sheet is one of the three annual financial statements that companies are legally required to produce for auditing purposes. It.](https://reader036.fdocuments.in/reader036/viewer/2022082713/56649ea35503460f94ba73ff/html5/thumbnails/1.jpg)
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Balance SheetA balance sheet is one of the three annual
financial statements that companies are legally required to produce for auditing purposes.
It is a record of an organization’s financial position at a specific date, usually the end of the trading year
A balance sheet must contain 3 essential parts: assets, liabilities and capital and reserves
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AssetsAssets are items owned by or owed to a
business and hold a monetary value, such as cash or buildings. Assets can be classified as: Current assets and Fixed assets
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Fixed AssetsA fixed asset is any asset that is purchased
for a business use, rather than for selling, and is likely to last for more than 12 months from the balance sheet date
There are 3 groups:TangibleIntangibleInvestments
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Tangible Fixed AssetsEquipment, machinery property (land and
buildings), and motor vehicles.Tangible assets tends to depreciate ( fall in
value) over time
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Intangible AssetsThese are non-physical fixed assets such as
brand names, trademarks, copyrights and patents.
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InvestmentsThese are medium to long term financial
investments that the business has.Businesses can hold shares and debentures in
other companies.
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Current AssetRefers to cash or any other liquid asset that
is likely to be turned into cash within 12 months of the balance sheet date
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LiabilitiesA liability is a legal obligation of a business to
repay its lenders or suppliers at a later dateLong-term liabilities: are debts that are due
to be repaid after 12 months ex: debentures, mortgages and bank loans. In the balance sheet, we call: Accounts payable: amounts falling due within one year
Current Liabilities: are debts that must be paid within 1 year of the balance sheet date. In the Balance sheet, we call : Creditors: amounts falling due within one year
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Capital and reservesShare capital: refers to the amount of
money raised through the sale of sharesRetained profit: is the amount of the net
profit after interest, tax and dividends have been paid
Reserves: will record any proceeds from retained profits in previous trading years. It may also include capital gains in the value of fixed assets
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BALANCE SHEETEXERCISES EXCELMODELCASE