A balance sheet, also referred to as a statement of condition, is a document that provides a snapshot of an individual or company’s financial position at a specific point in time. It outlines their assets, liabilities, and owners’ equity, showing how much they have, owe, and own. This is distinct from an income statement, which tracks earnings and expenses over a period of time.
The statement of condition, also known as a balance sheet, is a financial statement that presents the current financial status of an entity. It reveals the worth of the entity’s assets, liabilities, and owners’ equity. For instance, if a company possesses $100,000 in assets, $50,000 in liabilities, and $50,000 in owners’ equity, these values would be displayed in the statement of condition. This statement is crucial as it aids investors and creditors in comprehending the financial well-being of the entity. Unlike the income statement, which illustrates the entity’s revenue and expenses over a specific timeframe, the statement of condition provides a snapshot of the entity’s financial position at a particular moment.
A Statement of Condition is a financial statement that provides an overview of a company’s assets, liabilities, and equity at a specific point in time.
A Statement of Condition is important because it provides a snapshot of a company’s financial health and can be used to make informed business decisions.
A Statement of Condition is typically prepared by a company’s accounting department or a certified public accountant (CPA).
A company should prepare a Statement of Condition at least once a year, but it can be prepared more frequently if needed.
A Statement of Condition includes a list of a company’s assets, liabilities, and equity, as well as any notes or disclosures related to those items.
Assets are items that a company owns and can use to generate revenue, while liabilities are debts or obligations that a company owes to others.
Equity represents the residual value of a company’s assets after all liabilities have been paid off. It is also known as net worth or shareholder’s equity.
A Statement of Condition can be used as evidence in legal proceedings to show a company’s financial position at a specific point in time.
Yes, a Statement of Condition can be audited by a CPA to provide assurance that the financial information is accurate and reliable.
A Statement of Condition and a Balance Sheet are essentially the same thing, but a Statement of Condition is typically used in the banking industry, while a Balance Sheet is used in other industries.
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This glossary post was last updated: 17th April 2024.
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