Check balance definition

A balance sheet is a financial instrument that is used to display the list of total debits and account credits, next to the balance of each of them (either debtor or creditor).Thus, it allows to establish a basic summary of a financial statement .

However, we have It should be noted that, within the scope of accounting and financial management of any company, the existence of another series of balances is necessary, in addition to the aforementioned verification, specifically, the preparation of the balance sheets must also be carried out, of profit and loss or the abbreviation.

Of these three new balances, the first one mentioned is the one that has as a clear objective to show at all times the economic situation that the company in question is going through.The second, as its name indicates, is the one with which It knows whether it has good losses or benefits.And finally, the abbreviation, which is the balance presented by the aforementioned losses and gains of an SME (Small and Medium Enterprises).

The balance of evidence reflects the accounting of a company or organization in a certain period, so this balance acts as the basis for preparing the annual accounts.

The check balance also allows you to confirm that the accounting of the company is well organized.It is possible that the balance of sums and balances is correct and that, however, it includes a defective accounting .It would be the case, for example, of someone who has paid one provider but wrote that payment to another.The balance would be correct from the numbers, but not in practice.

In addition to all of the above, we cannot ignore the fact that every balance of evidence has to have a clear, concise and easily understandable structure, thus, it is established that it always has to have the following sections for its clarity: account, sums must, sums have, balance must and balance have.

Likewise, once all these elements that give structure to the balance sheet in question have been taken into account, we must proceed to its elaboration that consists of two basic steps: to make all the sums for each account of the entries, both the of duty like those of credit, and achieve the corresponding balance for the two mentioned sections as well.

That is, the elaboration of a balance of verification begins with the realization of the sums of the entries of each account, both in the debit and in the credit.In the next step, the balance of each account is obtained (the difference between debit and credit).Finally, the amounts and balances obtained are transferred to the balance .

In general, the balance of evidence is a voluntary document for the entrepreneur, although it is advisable for him to know precisely the financial status of his company without the need to drag errors until the preparation of the annual accounts.