Balance sheet prior to income/profit loss?

Question

Hi, I was just wondering if a balance sheet is conducted prior to expenses have been payed? Would you then include the amount you recieved from sales in the cash at bank rather than your overall net profit?

Thanks!

Answer 1

You have to keep a general ledger of all incomings and outgoings under what ever code you company uses, whether it be wages, purchases, insurance allowances etc., do you do cash flow predictions and accruals, it all depends on what system you are using, I use to do both, one on paper and the others on computer, balance sheets can be printed off as often as you want, every day twice a day, its up to the company, does it include creditors and debtors ledgers too, what you bank might not even be enough to cover you expenses, or if you are part of a larger chain they take money from you if you've made a lot, my old company took it everytime we had in excess of 50K in the bank, but we could borrow it back if we needed to, which they frowned upon, you dont state enough for me to give you the ins and outs, each company is different, and auditors are always bought in so you have to have all your receipts and itemise them hence the ledger, only you know your operating system, so you should be able to work it out, and remember, not all companies have the end of the year at 30/6, ours was 31/12 and yes, put in all those hours for no pay, it also depends on whose in charge of the money! :)

Answer 2

If you have expenses which have not been paid, you should make the adjusting entries, post them to the ledger, take out a trial balance and prepare a profit and loss statement. From there you'll know the profit which u then add to the opening retained earnings to give the closing retained earnings which appears in the balance sheet. U don't prepare a balance sheet before the P/L.

Answer 3

http://en.wikipedia.org/wiki/Balance_she...

http://en.wikipedia.org/wiki/Profit_and_...

These two links should help you out with your question.

Personally I would do my monthly books, which is a basic profit and loss done monthly or as some say balance sheet. Then do a yearly profit and loss.