Understanding the Importance of Balance Sheets for Business

Week 04 Discussion I think what is happening is that John only looked at his Profit /Loss sheet, which is how much the business earned and spent over a specific amount of time. If he kept a balance sheet, he would know how much cash he had on a specific day. A balance sheet shows more than what came into a business and what went out. It would also show assets that appear as a profit, but are not cash. John may have shown a profit of $3000 at the end of the year, but much of that could be assets, such as equipment or loans, that don't equal cash in the bank. John will need to complete a balance sheet each month and check his bank balance each day to know what he can spend. This is new to me so I look forward to learning from you all this week!