The balance sheet is the cornerstone of the financial statements. The SEC has always wanted and expected more information and disclosure in the financial statements. Starting with the balance sheet, how could we expand on what is reported and how to disclose the information? Secondly, should we expand on what is available? Is there sufficient information already disclosed and in fact, are we possibly disclosing too much to the common reader as it is?
Solution
The balance sheet is a summary of firms\' assets and liabilities, including share capital and reserves at a defined moment in time. I t has been described as a snapshot or still picture of the financial position of a business entity
The various groups interested in the company can also draw useful inferences form an analysis of the information contained in the balance sheet.
The information contained in published financial statements is of particular importance to external users, such as shareholders and investors. Without such information they would not be able to take right decisions about their investments.
Therefore, it is of utmost importance for a company to disclose all its financial information to its stakeholders so that they can make correct decision regarding the investment.
However a note of caution that companies may choose to hold information that could impinge on competition or any other information of its kind that could result in its competitors gain a strategic advantage .
But with respect to investors a firm should disclose all the pertinent information needed to make an investment decision.
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The balance sheet is the cornerstone of the financial statements- The.docx
1. The balance sheet is the cornerstone of the financial statements. The SEC has always wanted and
expected more information and disclosure in the financial statements. Starting with the balance
sheet, how could we expand on what is reported and how to disclose the information? Secondly,
should we expand on what is available? Is there sufficient information already disclosed and in
fact, are we possibly disclosing too much to the common reader as it is?
Solution
The balance sheet is a summary of firms' assets and liabilities, including share capital and
reserves at a defined moment in time. I t has been described as a snapshot or still picture of the
financial position of a business entity
The various groups interested in the company can also draw useful inferences form an analysis
of the information contained in the balance sheet.
The information contained in published financial statements is of particular importance to
external users, such as shareholders and investors. Without such information they would not be
able to take right decisions about their investments.
Therefore, it is of utmost importance for a company to disclose all its financial information to its
stakeholders so that they can make correct decision regarding the investment.
However a note of caution that companies may choose to hold information that could impinge on
competition or any other information of its kind that could result in its competitors gain a
strategic advantage .
But with respect to investors a firm should disclose all the pertinent information needed to make
an investment decision.
