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Balance Sheet Questions

What is a balance sheet?

The financial statement of a company that lists its assets and liabilities is called a balance sheet. The shareholder’s equity at any given point in time is also listed on it. Balance sheets often cause some confusion, read below where Experts have answered these questions.

Is the net income that is reported on the balance sheet the same as the net income that is reported on an income statement of a company?

The net income that is reported on the balance sheet of a company should be the same as the net income reported on the income statement as it is normally derived from the income statement itself.

What can one do if the net income on the balance sheet is different from that of the income statement?

If the net income on the balance sheet is different from that of the income statement, the individual may have to check if the trial balance levels and ending balances are all correct. He/she may also have to check if the ending ledger balances are correctly reported on the profit and loss accounts and make sure that no entries are omitted.

Where should one report service revenue on the balance sheet?

The service revenue is not reported on the balance sheet. It is normally reported on the income statement under the revenues section. However, if the revenue is received before the service is performed, then it may be reported on the balance sheet as a current liability. In such a situation, the revenue may have to be earned within a year of reporting it. Such revenue may be called deferred service revenue.

Is it required for all the liabilities and assets to match on a balance sheet?

It is required for all the assets of a firm to match all its liabilities on a balance sheet. If there are any profits in the firm, then they will be reported under the retained earnings section of the sheet.

Can a balance sheet be used to calculate the rate of return on an investment?

A balance sheet may not be very helpful if an individual wants to calculate the rate of return on an investment. This is because the balance sheet will only list the company’s assets and liabilities. If an individual wants to calculate the rate of return, he/she may use the income statement.

What is the difference between an unclassified and classified balance sheet?

All of an individual’s assets, liabilities and equity are grouped together on an unclassified balance sheet. All the assets will be grouped under the asset grouping, the liabilities under the liabilities grouping and the equity accounts under the equity grouping. A classified balance sheet is where the assets and liabilities will be further broken into current and noncurrent groups. The equity will be divided into capital, additional paid in capital and retained earnings.

Can an individual report accounts like accounts payable and payroll liabilities to balance out everything that is mentioned on a monthly balance sheet?

An individual may report accounts like accounts payable and payroll liabilities to balance out everything that is mentioned on a monthly balance sheet.

What is the difference between a balance sheet and a profit and loss statement?

A balance sheet reports the company’s assets, liabilities and equity at any given point of time whereas the profit and loss statement will report the profit made by the company. This will include any revenue and expenses of the company over a period of time.

A balance sheet is very important to report a company’s financial assets and liabilities. It is also crucial for tax purposes. Hence you should be able to understand how a balance sheet is created and what needs to be reported in it. You can ask an Expert if you have any doubts about the creation of a balance sheet or any of its other aspects.

Ask a Financial Professional

Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: General
Satisfied Customers: 2149
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
43581946
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Rakhi Vasavada
Financial and Legal Consultant
Satisfied Customers: 2073
Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Recent Balance Sheet Questions

  • F. Naz Assignment 2: Source of Revenue: Review of Financial

    F. Naz Assignment 2: Source of Revenue: Review of Financial Statements
    Download and review the financial statements of Ascension Health, a nonprofit, religious-based healthcare system, from
    http://www.ascensionhealth.org/index.php?option=com_content&view=article
    &id=45&Itemid=160.
    Download and review the financial statements of HCA Holdings, Inc., a for-profit healthcare system. You can find the financial statements on one the many sites where such information is available, such as Zacks Investment Research orMarketWatch. Search the site with HCA Holdings' ticker symbol ("HCA") and then look for the "Financial" tab or section when you come to the site’s HCA Holdings page.
    Review the companies' balance sheets, statements of income/operations, and statements of cash flows. Identify and describe five similarities and five differences between the two companies' financial statements.
    After analyzing the statements, respond to the following:
    1. You have reviewed information on three financial statements for two respective organizations. In what way is each statement useful? Which statement seems to you most useful?
    2. If, due to time constraints, your organization could only prepare one financial statement, which one—balance sheet, statement of income, or statement of cash flow—would you recommend?
    .
    Assignment 2 Grading Criteria Maximum Points
    Described five similarities and five differences between the two organizations’ financial statements. 80
    Compared statements and identified usefulness of each. Selected one statement as the most useful and justified your choice. 50
    Explained which financial statement you would recommend an organization prepares first over others and why. 50
    Presented a structured document free of spelling and grammatical errors. 10
    Properly cited sources using APA format. 10
    Total 200
  • I am trying to match QB Balance Sheet with tax return for a

    I am trying to match QB Balance Sheet with tax return for a partnership. The client's BS has all income (1065 and K-1) combined. However, does it all go on the Sch L or is the Sch K-1 info moved to equity since it goes on the personal return? The BS shows retained earnings. The same with the S Corp.
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    I have a client with a rental property they sold. They are carrying the note. I have the installment sale on the 6252, but how is that posted on the books. The payment goes to principal and interest. The taxable portion of the principal, I'm thinking goes to 1231 gain, but what is the debit side of that JE.
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