Importance of Comparative Balance Sheet

Comparative balance sheet is the part of financial analysis in management accounting. We can explain the importance of comparative balance sheet in the answer of following questions:

1. # Where did we Use our Fresh Share Capital Fund?

If any company issues new shares and get the fund. This will easily be found by preparing comparative balance sheet. Exact figure, we can find. For example, we had  $ 100000 total share capital in 2010 and $ 180000 in 2011. Now, by comparing both share capital, we find that there is 80% increase in our total share capital. But if we compare our fixed assets and suppose increase in fixed assets is 40%. At that time, we did not utilize our share capital for buying new fixed capital. There where did we use our share capital. We can not make our shareholder fool by telling that we still use all share capital money for buying fixed assets because every shareholder may have capacity to appoint CA or CPA or CFA. Company can never speak white lie. So, management of company will be responsible for balance 40% use. Next part of comparative balance sheet may give answer above question.

2# Why is Current Liabilities are more than Current Assets?

If our comparative balance sheet shows net increase in current liabilities is 300% and net increase in current assets is 100%. Difference of this will negative increase in working capital. Let me simplify this. It means liabilities have increased by 300% but we have not capacity to pay just 100% current liabilities with our current assets. Next 200% current liabilities will not get anything via cash without liquidation. So, management has to concentration on this point.

3. # Where did we use our Long Term Debt?

Sometime company gets long term debt for different needs. If we compare long term debt of 2010 and 2011 and suppose, we find that it also increase 100% and assets side, we see 200% increase of profit and loss account's debit balance. At that time, total picture of company may be clear. Company is using his share fund and long term funds in very very bad projects in which its capital and debt is sunken. So, company is increasing debt and same debt is using for covering loss but loss is still increasing fast for consuming company's debt and capital. This is worst situation of company.

Download our Accounting eBooks

Financial Accounting eBook

Download Now »

Cost Accounting eBook

Download Now »

Corporate Accounting eBook

Download Now »

Management Accounting eBook

Download Now »






access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Finance Journal Entries Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
Accounting Education: Importance of Comparative Balance Sheet
Importance of Comparative Balance Sheet
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock