Balance sheets demystified

Accounts Demystified is the name of a book that I have just read,  and posted a review of in my LinkedIn reading list.

As a firm of accountants, at K&H we are always looking out for ways to help our clients understand better what it is that we do for them. We are (quite naturally) convinced that our work is of great value, but sometimes when you don’t fully understand something, it is hard to see the value.

Balance sheets are a good example of this. Most business owners understand their profit and loss account, but few really know why their balance sheet is probably the most important part of their accounts. It is also the hardest thing to get right – it has to balance!

The book also reminded me to be on guard about using jargon, and that ‘jargon’ is not just obscure words and acronyms: words and symbols which we commonly use in the office and are not always understood (in the same way at least) by non-accountants, for example:
- ‘Net’ and ‘gross’
-  numbers in (brackets), red type, or with a dash in front are usually negative
-  ‘accruals’
-  ‘cash’ often means not on credit, rather than notes and coins
-  and of course the old chestnut of ‘debit’ and ‘credit’

If you’re interested in other book reviews that I have done, please have a look at my linkedIn page and follow my reading list there.

I’m planning to run a short informal session to explain balance sheets and cover some of the jargon.  Please let me know if you’d be interested in coming along.