Free Small Business Accounting Software
By Elizabeth Morgan
Accounting is a system of collecting, summarizing, analyzing and reporting, in monetary terms, information about an organization. The end product of business accounting software is the financial statements consisting of the balance sheet, profit and loss account, and statement of changes in financial position. These statements are, therefore, the source of information on the basis of which conclusions can be drawn regarding the operations of a firm. The analysis and interpretation of financial statements would depend upon the nature and type of information available.
When talking about business accounting software, the balance sheet is a significant financial statement of a firm. In fact, it is called a fundamental accounting report. Other terms to describe this financial statement are statement of financial position or position statement. As the name suggests, the balance sheet provides information about the financial standing/ position of a firm at a particular point of time. It can be visualized as a snapshot of the financial status of a company. The financial position of the company is valid for only one day- the reference day. On a preceding or following day, it is bound to be different.
The financial position of a firm as disclosed by the balance sheet refers to its resources and obligations and the interest of its owners in the business. In operational terms, the balance sheet contains information in respect of assets, liabilities and shareholders equity. It can be presented in either of two forms: account form or report form. It is usually presented in account form. In the report form a step-wise balance sheet is prepared, listings asset at the top followed by liabilities and owners equity. The contents of the balance sheet, in whatever form presented, consist of assets of the firm and the means, by which they have been financed, that is, liabilities and owners equity.
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