The advent of technology has transformed the way companies conduct businesses, marshal resources to gain market share and report performance data. Corporate assets help management engineer the best tactics to compete with rivals and report accurate financial data summaries -- including balance sheets, statements of cash flows and income statements.
Corporate strategists review specific balance sheet items to understand the effect of new technologies and determine the best way to use computer software to track operating assets. These run the gamut from land and equipment to cash, merchandise and customer receivables. Given the preeminence of these resources in a company’s activities, the board of directors and senior management often set a strong tone of compliance -- pushing for more asset management training and reinforcement of appropriate behavior and attitudes. For example, top leadership may ask that warehouse managers pay closer attention to the way the company stores and processes merchandise and learn new methodologies to rein in waste.
A balance sheet is one of the reports a company uses to gain the confidence of investors and keep money and expertise flowing in its operations. If financiers see a positive balance sheet -- meaning, one that shows a solvent company -- they’re more likely to increase their equity investments and pour more cash into the business. Financial commentators often use the terms “statement of financial position” and “report on financial condition” when referring to a balance sheet. The report incorporates assets, debts and equity items, such as dividends and common stock.
A business follows various procedures to record its operating assets, and it reports total resources in the corporate balance sheet. When the organization purchases an asset, a bookkeeper debits the corresponding asset account and credits the cash account or the notes payable account. The bookkeeper credits the cash account if the company does not finance the deal, but makes an outright remittance. In accounting terminology, crediting cash means reducing company money; this is different from the banking terminology. After recording assets in general ledgers, accountants prepare a trial balance to confirm the accuracy of journal entries and ensure that total debits equal total credits. Financial managers prepare accounting reports, including a balance sheet, to tell the rest of the world specific resources belong to the company at a given point.
Asset purchase and valuation procedures often require familiarity with math, business acumen and analytical dexterity. Consequently, companies often reach out to specialists to determine the best ways to appraise resources before buying them. These experts range from appraisers and certified public accountants to professionals accredited in business valuation.
- The University of Texas at El Paso; Cash and Receivables; Sid Glandon, DBA, CPA
- "Intermediate Accounting"; Cash and Receivables; J. David Spiceland, et al.; 2007
- The Motley Fool: How to Read a Balance Sheet: Current Liabilities
- AccountingCoach: Balance Sheet; Harold Averkamp
- PrinciplesofAccounting: The Reporting Cycle; Dr. Larry Walther
Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.