when should a balance sheet be prepared?
Accounting balance sheets can be prepared by the business every month after the bank account has been reconciled.
Then the business owner can check it every month and see how business is looking.
Once a Year
A final balance sheet is prepared at the end of a financial year after the final profit and loss report has been prepared for tax purposes.
I recommend this be done by a professional bookkeeper or qualified accountant who will ensure the financial reports are in agreement with generally accepted accounting practices (GAAP) and with tax legislation.
They can also make the necessary adjustments to do so.
The professional bookkeeper or accountant will either:
- pass on these adjustments (known as end of year alignment journals) to the business to update the bookkeeping system if it is a desktop version of software, so the business can get it in alignment with the final balance sheet of the year, or
- will make the adjustments themselves if the business bookkeeping software is online and they have access to it
This ensures the information in the bookkeeping system continues on accurately from year to year as the business goes on with trading activities which affect the assets, liabilities and equity.
how detailed can balance sheets be?
Large businesses and corporations tend to naturally have more complicated balance sheets and might only display the information as a summary under summary headings.
Small businesses tend to have simple, less complicated reports and can display more detail on the report.
The balance sheet for either big or small business can be as detailed or as summarised as the business requires.
It could simply show a total for each heading (assets, liabilities and equity), or it can show a listing of each item that makes up the headings.
What other names can accounting balance sheets be called?
Another name for an accounting balance sheet is the statement of financial position.
Or just Balance Sheet.
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