Balance is the movement that a body makes to one side or the other.
Balance is the movement that a body makes when it leans to one side and the other, or forward and backward. There is a children's attraction known as a seesaw or seesaw and it is made up of a bar that can be made of metal or wood that is suspended on an axis and has seats at its ends so that a child can sit on each side. and they swing one by one from top to bottom.
Balance is also the movement that a boat experiences from port to starboard or vice versa. On the other hand, the concept refers to a hesitation or insecurity regarding something.
However, the most common use of the word balance allows us to name the comparative study carried out on a process or situation, with the aim of predicting its evolution.
Balance in the economy
In a similar sense, a balance sheet is, in the field of commerce , the comparison between the assets and liabilities of a company to know the state of business. It is an accounting document that offers information about the state of the financial situation at a given time.
For this, it is structured based on three main concepts: assets , liabilities and net worth .
The asset includes the values that the company has; This means that they are capable of generating money through their use, exchange or sale. It is worth mentioning that both material assets and rights owned by the company in question fall into this classification. Furthermore, within the Assets there is the Non-Current Asset (goods and rights that have been acquired with the objective of remaining in the company for a long time, greater than one year) and Current Assets (goods and rights that have been acquired to remain in the hands of the company for a period of less than one year).
Liabilities , on the other hand, are the economic obligations that the company has, such as debts, loans and purchases with deferred payment. A clear differentiation is established between those financial resources that are payable and those that are not, therefore the properties of the owners of the Capital are not considered while those that belong to third parties who are unrelated to the company are payable, and, Therefore, they must be returned at a certain time. In turn, within external resources, a distinction is made between current (repayment must be made within one year) and non-current (they do not have an expiration date that falls within the limits of 12 months).
The difference between assets and liabilities is known as net worth and reflects the contributions of shareholders plus undistributed results.
In short, net worth is the difference between what a company has and what it owes and is made up of its own funds, the result of adjustments, donations and assets received as legacies.
The balance sheet is an accounting document.
How to do it
When carrying out the balance sheet, each of the assets must be properly classified and the gross costs and benefits obtained must be clearly established in order to finally be able to create the General Accounting Plan in which it is possible to discover what type of year has been had. as to what has been achieved from the investments and whether the objectives set by the company at the beginning have been achieved.
Finally, it is important to point out that each company must present the balance sheet in such a way that the elements belonging to the assets and liabilities are separated with their respective subdivisions explained above in order to finally become the result of the various commercial operations that it has carried out. made by the company .