Accounting For Dummies®, 4th Edition

5.2. Presenting a Balance Sheet

Figure 5-2 presents a two-year, comparative balance sheet for the business example that I introduce in Chapter 4. The balance sheet is at the close of business, December 31, 2008 and 2009. In most cases financial statements are not completed and released until a few weeks after the balance sheet date. Therefore, by the time you would read this financial statement it's already out of date, because the business has continued to engage in transactions since December 31, 2009. (Managers of a business get internal financial statements much sooner.) When substantial changes have occurred in the interim, a business should disclose these developments in its financial report.

When a business does not release its annual financial report within a few weeks after the close of its fiscal year, you should be alarmed. There are reasons for such a delay, and the reasons are all bad. One reason might be that the business's accounting system is not functioning well and the controller (chief accounting officer) has to do a lot of work at year-end to get the accounts up to date and accurate for preparing the financial statements. Another reason is that the business is facing serious problems and can't decide on how to account for the problems. Perhaps a business may be delaying the reporting of bad news. Or the business may have a serious dispute with its independent ...