In this day and age, pictures are everything. So, considering a balance sheet as a snapshot of the company’s financial position at a specific point in time or date is helpful. It would be different both the day before or the day after. So, it’s up to you, the user of financial statements, to ensure you read and do your best to understand the entire financial statement document. This exhibit shows what the entity owns, what it owes as of that date and then a section to somewhat show how it got there. Item are considered current if they are expected to be realizable into cash or paid within the next year. Long term assets are recorded at historical cost, so they may be worth substantially more than that. Some items are simply accounting entries and linking them to realization of cash is not feasible. Remember, if it is presented on cash basis that you won’t see all the unpaid bills. What you want to glean is if the business can meet its debts and keep operating. Remember, while a consideration, that the net assets over liabilities generally minimally effect the value of a business where generally a reflection of the net future profits is utilized as part of the calculation.
