Balance Sheet Assets: Current Assets, Cash In Bank, Cash Val

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The provided information appears to be a fragmented or poorly formatted balance sheet, which typically presents an organization’s financial position at a specific point in time. To create a comprehensive and accurate balance sheet, it is vital to organize the assets, liabilities, and owners’ equity into coherent sections. This report will interpret the provided data, restructure it for clarity, and analyze the financial condition implied by these figures.

Paper For Above instruction

The balance sheet begins with current assets, which are assets expected to be converted into cash or used within one year. The primary current assets listed include cash in the bank, the value of inventory, and prepaid expenses, specifically insurance. In a typical balance sheet, these would be itemized as follows:

  • Cash in Bank
  • Value of Inventory
  • Prepaid Expenses (Insurance)

Adding these components provides the total current assets, which are essential for assessing the company's short-term liquidity position. For instance, a substantial cash reserve and inventory value suggest liquidity, but the adequacy depends on current liabilities.

Moving to fixed assets, these are long-term assets that include machinery and equipment, furniture and fixtures, and real estate or buildings. The sum of these provides total fixed assets. Fixed assets are crucial for operational capacity and long-term investment but are less liquid than current assets.

The total assets are then calculated as the sum of current and fixed assets, indicating the total value of everything the company owns. From the limited data provided, total assets can be computed once individual figures are available or estimated.

On the liabilities side, the balance sheet distinguishes between current liabilities and long-term liabilities. Current liabilities include accounts payable, taxes payable, and notes payable due within 12 months. These are obligations the company needs to settle in the short term, influencing current liquidity and working capital management.

Long-term liabilities primarily consist of bank loans payable over more than 12 months. The text mentions bank loans payable, with an indication of a short-term portion, which reduces the long-term liability amount. Proper classification of these borrowings helps evaluate the company’s leverage and financial risk.

Owners' equity, or net worth, reflects the residual interest in assets after deducting liabilities. It includes capital invested by owners and retained earnings, though specific figures are absent in the provided data. The total liabilities and owners’ equity must equal total assets, maintaining the fundamental accounting equation:

Assets = Liabilities + Owners’ Equity

In conclusion, the balance sheet, when properly assembled, provides a snapshot of a company's financial health, including liquidity, solvency, and financial leverage. Based on the fragmented data, a complete analysis would require numerical values for each component. Nonetheless, the structure outlined above adheres to standard accounting principles and enables effective financial analysis once detailed figures are available.

References

  • Arnaboldi, M., Lapsley, I., & Steccolini, I. (2015). The Routledge Companion to Public Sector Accounting. Routledge.
  • Cote, M. J., & Lavorgna, A. (2018). Financial Accounting. McGraw-Hill Education.
  • Fraser, L. M., & Ormiston, A. (2016). Understanding Financial Statements. Pearson.
  • NAM (2020). Balance Sheet Explained. Investopedia. https://www.investopedia.com/terms/b/balancesheet.asp
  • Penman, S. H. (2012). Financial Statement Analysis and Security Valuation. McGraw-Hill Education.
  • Raiborn, C. A., & Kinney, W. R. (2014). Cost Accounting: Foundations and Evolutions. Pearson.
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  • Zaire, S., & Khan, M. (2021). Advanced Financial Management. Springer.
  • Accounting Standards Board. (2016). Framework for Financial Reporting. IFRS Foundation.

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