Balance Sheet and P&L Statement

Balance Sheet and the Profit & Loss statement is suppose to describe the financial health of a organization . To put it very simplistically it is suppose to explain these

Income/Expenditure and Asset/Liabilities

• Explain how much did the company Earn and all sources of its Earnings
• Explain the Expenses incurred and all sources for its Expenditures
• Explain Assets that the company has created
• Explain Liabilities that the company would need to take care off.

Valuation
Explain how has the company valued it Assets, Intangible Assets and Liabilities

Disclosure
The risks that company sees to its business and hence to its earning prospects and any other problems and issues that the management foresees

As simple as this may sound , it is not , as we have seen in case of Satyam in India and may be Enron in US, the management is uncomfortable keeping its accounts as pain and simple and finds ways to distort facts, when all that is expected of them is to be unambiguously clear about the above mentioned three pieces of information

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