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SW Ont | Income not yet earned is never on a correctly done balance sheet.
If you have sold something, or have already earned but not received income it/they will show as an asset on a balance sheet.
A Balance Sheet is a snapshot taken for a given point in time. If we sold everything today and paid all the bills today, what would it look like.
Every asset (land, ,equip, buildings, crops, band accounts, stocks/bonds, amounts owed to you due ) is included.
Every liability is also included (loans and mortgages, accounts a suppliers not yet paid, payroll owed) in also included.
Items are categorized to indicated the current, mid, long term -- representing how long it would take to liquidate to cash or how long you have to pay them to make it easier to understand cash requirements during the nest business cycle (typically a year for farming) as well has requirements over longer periods of time.
Net worth is the difference between the two.
Bankers are concerned about the balance between them at each time horizon.
Tells them if you have assets that can be borrowed against and tells them if you can pay the bills ad loan payments that are needed during the review period.
They should be considering both can you get by this year AND are you likely to be able to cover future payment and living expense requirements over the next few years.
Last years (or whatever period income show up as an asset - cash if you still have it, or the current value of the item you purchased.
If you bought food, rent and vacation etc it has no value on the balance sheet.
If you bought seed and it's still in your warehouse then it's on the balance sheet. If it was seed you used last year it is not.
If you bought equipment it has whatever it's value is on the date the balance sheet is being prepared for (like, say, value on Dec 31, 2018)
etc
Edited by redwngr 2/7/2019 18:10
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Balance sheet questions
