- the listing of all of the assets and liabilities of a company - that can tell you all of this. And once again, its understanding is crucial for the management of the company, potential investors, and many other users.Now, having in mind all afore said, let us view another definition of the balance sheet: "You can not have a more meaningless and confused statement holding a position of such a great importance" (Keron Bhattacharaya, "The accountancy's faulty sums"). Interesting opinionIn order to find out this authors points of view we will have to consider the balance sheet restrictions and limitations and the needs of its users, or at least some of them.The balance sheet is in essence a list of the assets and liabilities of the enterprise or organization at a point of time. The fact that it represents the position at one point in time is itself a limitation as it is only relevant in that point of time. At any other time a new sheet has to be drawn up. This means that in order for the balance sheet to be useful it should be as up to date as possible, and that its utility diminishes the more out of date it becomes. Similarly, in order that it is an accurate measure of the assets and liabilities should be as up to date as possible, and here lies another limitation.Another very strong limitation of the balance sheet is the fact that the costs are given in their historical expression. Although, as prevoiusly stated, this has its reasons, still in some cases it blurs the information on the sheet. This is especially true applied to the accounting in high - inflation environment, and is probably one of the reasons for the opinion of the South Asian author - Keron Bhattaraya. But even in normal economics sometimes the assets being stated as a figure which bears little if any relation to the current value (the most obvious example of this in recent years has been the changes in prices and values of land and buildings). This is a serious contra...
