Please forward this error screen equity investments balance sheet 108. When someone, whether a creditor or investor, asks you how your company is doing, you’ll want to have the answer ready and documented.

The way to show off the success of your company is a balance sheet. A balance sheet is a documented report of your company’s assets and obligations, as well as the residual ownership claims against your equity at any given point in time. Many people and organizations are interested in the financial affairs of your company, whether you want them to be or not. You of course want to know about the progress of your enterprise and what’s happening to your livelihood.

However, your creditors also want assurance that you will be able to pay them when they ask. On the balance sheet you list your assets and equities under classifications according to their general characteristics. It is a relatively simple matter to make a comparison of one classification with another or to make comparisons within a classification because similar assets or similar equities are listed together. Current assets include cash and other assets that in the normal course of events are converted into cash within the operating cycle. For example, a manufacturing enterprise will use cash to acquire inventories of materials. These inventories of materials are converted into finished products and then sold to customers. Cash is collected from the customers.

This circle from cash back to cash is called an operating cycle. It is always listed first on a balance sheet. Cash held for some designated purpose, such as the cash held in a fund for eventual retirement of a bond issue, is excluded from current assets. These investments are temporary and are made from excess funds that you do not immediately need to conduct operations. Until you need these funds, they are invested to earn a return. Simply stated, accounts receivables are the amounts owed to you and are evidenced on your balance sheet by promissory notes. Accounts receivable are the amounts billed to your customers and owed to you on the balance sheet’s date.

You should label all other accounts receivable appropriately and show them apart from the accounts receivable arising in the course of trade. Your inventories are your goods that are available for sale, products that you have in a partial stage of completion, and the materials that you will use to create your products. These expenses are payments made for services that will be received in the near future. Strictly speaking, your prepaid expenses will not be converted to current assets in order to avoid penalizing companies that choose to pay current operating costs in advance rather than to hold cash. Often your insurance premiums or rentals are paid in advance. Investments are cash funds or securities that you hold for a designated purpose for an indefinite period of time.