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IV. WHAT IS BALANCE SHEET ?

In financial accounting, a balance sheet or statement of financial position is a summary of the

financial balances of a sole proprietorship, a business partnership, a corporation or other business
organization, such as an LLC or an LLP. Assets, liabilities and ownership equity are listed as of a
specific date, such as the end of its financial year. A balance sheet is often described as a
"snapshot of a company's financial condition".[] Of the three basic financial statements, the
balance sheet is the only statement which applies to a single point in time of a business' calendar
year.

UTILITY AND PURPOSE

Yes it is useful and why? First of all the balance sheet is a communications tool towards
thirds(third parties) (banks, administrations) which can so check(control) the solvency of the
company(society) the balance sheet(assessment) also gives information onto the performance
and the profitability. He allows to know, by the implementation of certain ratios or by the follow-
up from one year to the next, which in summer the evolution of the balance-sheet posts and if
this one is good or bad. Furthermore, the balance sheet allows the manager to make its internal
analyses. Often, the company directors have a version more detailed of the balance sheet,
allowing them to realize a study pushed as for its patrimonial and financial balance
sheet(assessment) of his(her) company.Balance sheet accounts are one of two types of general
ledger accounts. (Income statement accounts make up the other type.) Balance sheet accounts are
used to sort and store transactions involving assets, liabilities, and owner's or stockholders'
equity. Examples of a corporation's balance sheet accounts include Cash, Accounts Receivable,
Investments, Buildings, Equipment, Accumulated Depreciation, Notes Payable, Accounts
Payable, Payroll Taxes Payable, Paid-in Capital, Retained Earnings, etc.

The purpose of the balance sheet is to give users an idea of the company’s financial position
along with displaying what the company owns and owes. It is important that all investors know
how to use, analyze and read this document.

Balance sheet accounts do not show results, even if one can infer this by comparing the balance
of accounts from different times.

V. CONTAINS OF THE BALANCE SHEET

Among other items of information, a balance sheet states firstly what assets the entity owns,
secondly how it paid for them, next what it owes (its liabilities), and finally what is the amount
left after satisfying the liabilities. Balance sheet data is based on a fundamental accounting
equation :

Assets = liabilities + owners' equity

Balance sheets, along with income statements, are the most basic elements in providing financial
reporting to potential lenders such as banks, investors, and vendors who are considering how
much credit to grant the firm.

Assets: Assets are subdivided into current and long-term assets to reflect the ease of liquidating
each asset. Cash, for obvious reasons, is considered the most liquid of all assets. Long-term
assets, such as real estate or machinery, are less likely to sell overnight or have the capability of
being quickly converted into a current asset such as cash.

Current assets: Current assets are any assets that can be easily converted into cash within one
calendar year. Examples of current assets would be checking or money market accounts,
accounts receivable, and notes receivable that are due within one year's time.

Cash:Money available immediately, such as in checking accounts, is the most liquid of all short-
term assets.

Accounts receivables:This is money owed to the business for purchases made by customers,
suppliers, and other vendors.

Notes receivables

Notes receivables that are due within one year are current assets. Notes that cannot be collected
on within one year should be considered long-term assets.

Fixed assets: Fixed assets include land, buildings, machinery, and vehicles that are used in
connection with the business.

Liabilities and owners' equity: This includes all debts and obligations owed by the business to
outside creditors, vendors, or banks that are payable within one year, plus the owners' equity.
Often this side of the balance sheet is simply referred to as "liabilities."
Accounts payable: This includes all short-term obligations owed by your business to creditors,
suppliers, and other vendors. Accounts payable can include supplies and materials acquired on
credit.

Notes payable: This represents money owed on a short-term collection cycle of one year or less.
It may include bank notes, mortgage obligations, or vehicle payments.

Accrued payroll and withholding:This includes any earned wages or withholdings that are owed
to or for employees but have not yet been paid.

Total current liabilities: This is the sum total of all current liabilities owed to creditors that must
be paid within a one-year time frame.

Long-term liabilities: These are any debts or obligations owed by the business that are due more
than one year out from the current date.

Mortgage note payable: This is the balance of a mortgage that extends out beyond the current
year. For example, you may have paid off three years of a 15-year mortgage note, of which the
remaining 11 years, not counting the current year, are considered long-term.

Owners' equity: Sometimes this is referred to as stockholders' equity. Owners' equity is made up
of the initial investment in the business as well as any retained earnings that are reinvested in the
business.

Common stock: This is stock issued as part of the initial or later-stage investment in the business.

Retained earnings: These are earnings reinvested in the business after the deduction of any
distributions to shareholders, such as dividend payments.

Total liabilities and owners' equity: This comprises all debts and monies that are owed to outside
creditors, vendors, or banks and the remaining monies that are owed to shareholders, including
retained earnings reinvested in the business.

the balance sheet(assessment) is the document which allows you to know, every moment of a
given exercise, the ways(means) which your company and the way has they are managed.
Between assets(active persons) and detailed liabilities(passive), you can determine the state of
financial health of your activity, and anticipate in advance the possible risks. What are, according
to you, the ways(means) which allow to optimize this balance sheet(assessment)?
The balances of the balance sheet(assessment) of company:
Most frequently used are the working capital, the working capital requirement and the need for
finance.
The working capital ( FR) represents the difference between the permanent resources (own
capital) and the fixed assets. If the working capital ( long-term cycle) is positive he(it) is going to
allow to finance the exploitation(operation) of the company