As we’ve noted in previous blogs it is critical for you as a bookkeeper to be well aware of the underlying principles for each of the main financial reports.
It’s pretty simple – if you can’t read the financials how can you be sure your work is correct and how can you make any beneficial comments to your clients? A Balance Sheet works on the fundamental accounting principle that:
Assets – Liabilities = Owners’ Equity
Within each section there is a further breakup. The two key components for liabilities are: