The Importance of Balance Sheet

Accounting Book

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People look for accounting services whenever they need a professional to assist them with their managerial accounting. The reason behind this is that handling one’s assets and liabilities is a task that’s easier said than done. So, it’s understandable why certified public accountants (CPA) and bookkeeping services are highly sought after in areas such as Kearny, New Jersey, wherein businesses are booming.  And of course, anything that involves a business’ money and properties should be tracked carefully, especially if you’re a budding entrepreneur. Think about it: would you feel comfortable managing your company without knowing what’s going on with your finances?

Now, after your local CPA firm finishes accounting your profit and losses, and assisting you in filing your taxes, they will then provide you with multiple reports that contain data regarding your current financial status. Some common examples of these documents are Cash Flow, and Profit and Loss Statements. But there is a lesser-known report that is as important as the aforementioned two: the Balance Sheet. So, why exactly is this type of statement essential in your business’ financial accounting process? To answer that question, you must first understand what this type of document is and what information a balance sheet provides. And you might be surprised how a single report from a CPA near you can help you take the right course of action for your business. 

A balance sheet is a document that contains all your company’s financial activities within a specific time period. It provides comprehensive data regarding the three key aspects of your business: assets, liabilities, and shareholder’s equity. Starting off with the first, assets represent the total amount of finances and properties that the company owns. On the other hand, liabilities pertain to the debts and financial obligations of the business, such as its sales and use tax. And lastly, the shareholder’s equity — or owner’s equity if the establishment is under sole proprietorship — displays the liquidated assets of a company minus the liabilities and treasury shares. Essentially, a balance sheet gives business owners in and out of Kearny, NJ an accurate idea of their gross profit and net income.

Aside from providing details regarding your income and expenses, it is also instrumental in helping you track your establishment’s financial standing. How is that? Well, a simple balance sheet enables you to examine your company’s financial indicators. These include your debt ratio, net profit margin, return on assets (ROA), and return on equity (ROE). With these indicators, you and your financial advisors will be able to carefully plan for your next business moves, thereby helping you avoid making ill-advised decisions.

As you can see, creating a balance sheet has its own benefits that can assist you and your financial planners in coming up with a wise strategy for your business. It gives an overview of how your company is doing financially, which helps you determine if you are gaining profit or losing money. Not only that, but it also provides significant data that will assist you with your cost accounting. All in all, a balance sheet is important because it enables you to manage your accounts properly and come up with the best plan of action for your New Jersey.

With all of these in mind, it is recommended for you to hire a professional that provides CPA services near you to assist in preparing a balance sheet template for your company. As you may already know, having this type of document should prove to be beneficial for the overall growth of your business. Now, while you can create a balance sheet for your establishment on your own, it would be better to let a trained expert develop it for you. They are more capable of tracking all of your transactions accurately, after all.

And if you’re looking for an accounting firm near you that can help in preparing and securing all of your documents, you can put your trust in Nicholas J Coco, CPA. As the most reliable accountants not only in Kearny but also in the surrounding areas in New Jersey, we provide our clients with a multitude of solutions that will cater to their legal needs. These include — but are not limited to — accounting, bookkeeping, business financial planning, and even tax services. For a comprehensive list of our solutions, feel free to visit our SERVICES page. If you want to read other blogs that can provide you with an insight into the field of accounting, you can do so by clicking here. And if you’re interested in availing yourself of our services, you can give us a call at 201-955-3100 or send us an email. You can also leave us a message by filling out the form provided on our CONTACT page. Alternatively, you can visit our office at 752 Kearny Ave, Kearny, NJ from 9 AM to 5 PM on weekdays to personally discuss with us your concerns.

Partner with the most reliable accountants New Jersey today. Partner with Nicholas J Coco, CPA.

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