The movement that a body makes when it leans to one side and the other, or back and forth, can be considered within this concept. There is a children’s attraction known as a seesaw or up and down and that is made up of a bar that can be made of metal or wood that is suspended on an axis and has seats at its ends so that a child can sit on each side and swing from top to bottom one by one.
Balance is also the movement that a boat experiences from port to starboard or vice versa. On the other hand, the concept refers to a hesitation or insecurity about something.
However, the most common use of the word balance allows to name the comparative study that is carried out of a process or situation, with the aim of anticipating its evolution.
The concept in economic terms
In a similar sense, a balance sheet is, in the field of commerce, the confrontation between the assets and the liabilities of a company to know the state of business. It is an accounting document that offers information on the state of the financial situation at a given time.
For this, it is structured based on three main concepts: assets, liabilities and equity.
The asset includes the values that the company has; This means that they are capable of generating money for their use, their exchange or their sale. It is worth mentioning that this classification includes both material goods and rights owned by the company in question. In addition, within the Assets are the Non-Current Assets (goods and rights that have been acquired with the objective of remaining in the company for a long time, over a year) and Current Assets (goods and rights that have been acquired for remain in the hands of the company for less than a year).
The liabilities, on the other hand, are the economic obligations that the company has, such as debts, loans and purchases with deferred payment. A clear differentiation is established between those financial resources that are demandable and those that are not, therefore the properties of the holders of the Capital are not considered while those that belong to third parties who are outside the company, are demandable, and, therefore, they must be returned at a certain time. In turn, within the external resources, a difference is made between current (reimbursement must be made within one year) and non-current (they do not have an expiration date that falls within the limits of 12 months).
The difference between assets and liabilities is known as equity and reflects the contributions of the shareholders plus the undistributed results.
Ultimately, net worth is the difference between what a company has and what it owes and is made up of its own funds, the result of adjustments, donations and assets received as legacies.
At the time of making the Balance, each of the goods must be properly classified and the gross costs and benefits obtained clearly established in order to finally carry out the General Accounting Plan in which it can be discovered what type of year has been had, as to what has been achieved from the investments and whether the objectives set by the company at the beginning of it have been achieved.
Finally, it is important to point out that each company must present the balance sheet in such a way that the elements belonging to assets and liabilities are separated with their respective subdivisions explained above in order to finally become the result of the various commercial operations that it has. made the company.