Financial Statement Basics and Presentation: The Balance Sheet

Financial Statement Basics: The Balance Sheet

The Canadian Balance Sheet shows the financial position of an entity which is why this statement is commonly referred to as ‘The Statement of Financial Position.” The first key point to note is that the balance sheet is prepared to show the company’s position at a specified single point in time (Example, as of December 31st, 20xx) whereas other financial statements such as the Income Statement are reported to show the company’s operational performance for a specified length of time such as, “for the year ended December 31st, 20xx.” In this example, the income statement is said to cover an entire year from January 1st – December 31st which is also known as a calendar year-end.

Furthermore, the balance sheet consists of three important elements to consider. It reports the balances of all assets, liabilities and equity accounts for the company. It is critical to understand the fundamental accounting equation in the preparation and presentation of the balance sheet where Assets = Liabilities + Equity.

Assets: contains all resources that the company owns at the balance sheet date. This includes both current and non-current assets that the company utilizes in order to generate future economic benefits. The most common current assets listed on the balance sheet includes cash, accounts receivable and inventory which are resources that are anticipated by management to be converted into cash within a year or the entity’s operating cycle, whichever is longer. Accounts receivable is simply the amount of money owed to the company by its customers which is generated from the sale of goods and services on account. Non-current assets, therefore, contains all resources owned by the company that have a useful life of more than one year. These assets are often referred to as Capital Assets which include equipment, buildings and land. Notice that all assets mentioned thus far whether current or non-current can be classified as Tangible Assets which contain physical substance. However, the balance sheet also presents Intangible Assets which are reported as non-current capital assets as well, since they have a useful life of more than one year but do not have any physical substance such as goodwill and patents. The sum of the current and non-current assets will equate to and be reported on the balance sheet as Total Assets of the company.
Liabilities: represents the claims against the company’s assets that have not been paid at the balance sheet date. Therefore, they are obligations to the company’s creditors. Just like assets, liabilities are subdivided into current and non-current. Accounts Payable is a frequent account that can be seen on the balance sheet and is essentially the direct opposite of the accounts receivable balance. While accounts receivable are amounts owed to the company from a customer sale on account, accounts payable are amounts owed by the company to its creditors arising from purchases on account both of which are either expected to be collected or paid typically within 30 days. Non-current liabilities represent obligations that will not be settled for more than one year or the company’s operating cycle, whichever is longer. Long-term liabilities (non-current) found on the balance sheet include long-term bank loans and notes payable. The creditor’s claims against the assets can be seen by examining the fundamental accounting equation stated above where the entity’s assets equal the creditors’ claim which represents liabilities plus the owner’s claim of the assets representing the company’s equity.
Equity: according to the fundamental accounting equation if we rearrange this to solve for equity, one can conclude that Equity = Assets – Liabilities. Upon closer examination, it can be clearly seen that equity represents the value of a business after liabilities have been reduced from the company’s assets. Often equity is referred to as the residual interest of a company. Also, it is important to note that the creditors’ claims to the assets are always settled first before the owner’s claim can be realized.
Presentation Example for the Statement of Financial Position

ABC Company (COMPANY NAME)

Statement of Financial Position

As at December 31st, 20xx

ASSETS

Current assets:

Cash $2,000

Accounts Receivable 1,000

Inventory 3,500

Supplies 500

Total Current assets $7,000

Non-Current assets:

Building $75,000

Equipment 7,000

Total Non-Current assets $82,000

TOTAL ASSETS $89,000

LIABILITIES

Current liabilities:

Accounts Payable $3,000

Wages Payable 1,500

Total Current Liabilities $4,500

Non-Current liabilities:

Lease liability 1,000

TOTAL LIABILITIES $5,500

OWNER’S EQUITY

OWNER’S NAME, Capital 83,5000

TOTAL LIABILITIES AND $89,000

OWNER’S EQUITY

The above illustrated example for the statement of financial position shows various key features. The heading indicates the name of the company, clearly indicates what type of financial statement is shown and what period it is covering. Furthermore, the statement of financial position is visual a representation of the fundamental accounting equation. The left side of the statement represents assets which is also the left side of the equation. The right side of the statement represents liabilities and owner’s equity which in turn captures the right side of the equation. As a result, the statement of financial position is perfectly balanced only when total assets equals total liabilities and owner’s equity.

After examining the above illustrated equity section of the balance sheet and noting the name of the company reporting the statement, it is important to recognize that the form of organization in this example is that of a proprietorship and not a corporation. The difference in the balance sheet reported by a proprietorship and by a corporation lies primarily within the equity section. In a proprietorship, the owner’s capital includes the initial investment in the business, net income (profits) or net loss (losses) and is reduced by any drawings (withdrawals made by the owner for personal use). However, in a corporation, these amounts are split up into two common accounts: Contributed Capital and Retained Earnings. Contributed capital also known as share capital represents the investments made by the shareholders’ of the corporation. Retained Earnings is the cumulative income/loss amounts of the corporation since inception and also includes all dividends paid out to the shareholders. Dividends are similar to drawings in that they both reduce the equity account since they are distribution of equity payments to the shareholders’ or the owner respectively.

5 ways to retain field workers and reduce employee turnover

Field Service businesses may be hesitant to increase expenses to retain employees, but the cost to hire new workers outweighs the cost to retain them. Poor employee retention can be expensive in other ways, too – it can negatively affect staff morale, decreasing your team’s willingness to work, affecting productivity and, therefore, your bottom line. Reducing employee turnover is cost-effective in the long run, and there are simple measures you can put in place to retain your field workers.

Offer competitive compensation and benefits

An employee’s salary should not be viewed as an expense but a long-term investment. Competitive compensation will encourage employees to stay at the company, as they know their hard work will be rewarded. When an employee is underpaid, they’ll take their skills to another company. When hiring new employees, research the average salary for similar roles and compare your offer with competitors in the industry. If you can’t increase salaries for current employees, offer additional benefits like cash bonuses, extra paid leave, or gift cards to show them you appreciate their hard work.

Set clear expectations and goals for employees

When employees’ roles and responsibilities are unclear, they can become frustrated, leading to low job satisfaction and demotivation. If you set realistic expectations and communicate these with your team, they’ll feel motivated and more engaged with their work. When setting goals for employees, make sure they’re clear, measurable, and challenging yet realistic, so they’re encouraged to achieve them. Work with your employees to set these goals, so they’re invested in your vision for them. Hold them accountable with regular reviews and share feedback to keep them on track to meet their goals in time.

Provide opportunities for growth

Employees looking for a challenge will find little reason to work for a company that isn’t interested in partnering with them to develop their skills. A business with opportunities for skills development and growth is enticing for employees. Make time for training sessions, whether you decide to implement an internal mentoring program or send workers to external training centres. You may be anxious to invest in workers when they could leave your company. However, if you give them the chance to learn new skills and apply for positions in the company, they’ll be encouraged to stay and build a career.

Promote a healthy work-life balance

As stress levels in the workplace rise, a healthy work-life balance is becoming more and more important for workers. Stress at work costs South African businesses R40 billion every year[TB1], and one of the significant causes of workplace stress is a poor work-life balance. Promoting a healthy work-life balance can reduce stress and save you money. It also shows your workers that their well-being is important to you and your supervisors, and they’ll feel valued. When workers feel valued, they’ll be committed to the company.

Support your team with Staff Management Software

When projects are well planned, realistic deadlines set, and everyone in your team knows what tasks they need to work on, your employees will feel supported. Staff Management Software can be used to achieve this. With one platform for managing your team’s schedule, you can view every job in progress and receive real-time updates from your technicians so you can offer help when needed. With access to the software on their Mobile Devices, your workers can view their schedules and share feedback with you even when they’re working remotely.

Presentation Show and Tell – Presentation Skills For Senior Executives

The “show” in ‘show and tell’ presentations, is slowly making a comeback in corporate America. It’s a development that is long overdue. Long, dense, dry text projected on conference room screens around the country has too long passed for the “show” criteria of executive presentations. The more text and the fewer the graphics in presentations it seemed, the more the presenter was congratulated for having prepared well.

To the long-suffering audience who had to endure these presentations, there was little reward in the effort, except getting to the end of them, where it was hoped, a few signs of life might still be found in the unscripted question and answer session.

So why are we coaches beginning to see some signs of progress? Why is it increasingly acceptable to deliver shorter presentations with more graphics and less text? Why is it now becoming acceptable to present ideas using a few simple visuals or props, or even, on their own merit with no slides at all?

Call it the rise of presentation personality or simply the maturation of that long-derided but necessary business tool: PowerPoint. Maybe it simply has to do with the groans emanating forth from every executive suite when word filters out of another request to put together, or to sit through, one of these dated presentations.

Whatever the cause, there is increasing recognition of another, more successful communication method available to executives; one best illustrated by the energy-infused performance style presentations of dynamos like Apple’s Steve Jobs.

These new wave of presentation skills share some common attributes:

1) The audience takes center stage.

Good presenters ask themselves what their audience needs and wants from each presentation. Great presenters center their presentations on those needs and wants and make the audience integral to the presentation. Start with what you know about the audience’s perceptions and assumptions of the issues you’re presenting. What will it take for them to invest in something new?

2.) No passion, no presentation.

Every presentation is an opportunity for the presenter to share a passion. If yours are about something else, a mere transfer of data for instance, find another way to get it to the people who need it (like hitting the send button). This is the difference between in person presentations and other ways of sharing ideas. If people are going to invest their time and energy to come and listen to you, you won’t be successful if you merely “tell”. You must show them your ideas through the passion with which you present them.

3.) Get visual.

Written text projected on a screen is not a “visual”. If you use slides, find a way of representing your ideas that have real and instant impact. Never use text to “say” what a visual can “show”.

4.) Presentation is performance.

Don’t present what you haven’t practiced or don’t believe in. This isn’t acting. To present well, be wholly engaged in your material and ideas before trying to communicate these well to an audience. Take your preparation seriously. And for heaven’s sake, come out from behind that lectern.

5.) Show leadership.

Your reputation for leadership is enhanced or reduced with every presentation. Seek to hit a home run then, every time you’re “on stage”, no matter your perception of what’s at stake. It may seem unfair, but the leadership skills you display during your presentation are the ones that will be used to judge the whole of your work. Even if you don’t yet have a leadership title, your moment in front of people is pivotal in determining if and when you’ll be given one. Think about what leadership looks and sounds like to you-and infuse your presentations with nothing less.