What exactly is a Balance sheet? The balance sheet of a manufacturing business contains information on the outstanding accounts receivable, accounts payable, net assets and net liabilities. All these are based on the statement of financial position. The balance sheet of a manufacturing business also contains information on the net assets of a manufacturing business. In this article, let us consider in detail about the details of balance sheets of manufacturing companies.
The main purpose of a manufacturing balance sheet is to provide a reliable assessment of the financial condition of a manufacturing company. The balance sheet should contain a statement of all the assets and liabilities of a manufacturing company. Generally, the balance sheet consists of all the liabilities and equity of the directors, owners of joint stock companies, etc, at a particular point of time. The assets and financial position of a manufacturing company may differ from the balance sheets of different companies. A good manufacturing balance sheet will be prepared by a reputed accounting firm. An accounting firm will prepare and maintain the balance sheet on behalf of a manufacturing company. This is done after careful analysis and discussion between the concerned person and the accounting firm.
The manufacturing balance sheets usually consist of three parts, namely income statement, balance sheet and statement of cash flows. The income statement of a manufacturing company lists all the income received by the manufacturing company and all the income paid to the manufacturing company. The balance sheet lists the total assets and the total liabilities of a manufacturing company. The second part of a manufacturing balance sheet is called as the statement of cash flows. This section includes the details of cash receipts, cash payments and other changes in the financial position of a manufacturing company. The third part is called the statement of capital account. It lists the value of the assets, liabilities and equity of a manufacturing company.
The manufacturing company can have more than one balance sheet. If a manufacturing company is involved in multiple lines of business, then the separate balance sheets may also be prepared for each line of business. The information in the balance sheets of a manufacturing company includes all the income received and the income paid, and all the assets and liabilities of a manufacturing company.
Manufacturing companies also keep a record of their operations in the books called accounts receivable. This includes all the unprocessed bills and unpaid accounts receivable. that are held against the assets and receivable of a manufacturing company. Accounts receivable are a very important aspect of a manufacturing company, as they show whether the manufacturing company is making a profit or is losing money.
There are two kinds of records kept, namely Accounts Receivables and Accounts Payables. The accounts receivable is the sum of all the bills and debits and the accounts payable is the sum of all the debits and credits. While looking at accounts receivable of a manufacturing company, it is necessary to have a look at the statement of cash flows of the manufacturing company because this gives an idea of whether the manufacturing company is making a profit or losing money. While looking at the balance sheet of a manufacturing company, it is very important to look into the statement of cash flows of the manufacturing company because this helps you to know the income of the company.