Balance Sheet Conspiracy

The Balance Sheet is the most valuable report for validating Accounting accuracy. It is also the most misunderstood in a way that can only have been intentional.

Read any major Accounting Text or listen to any Accounting Teacher who spews dogma and they will tell you that The Balance Sheet is a snapshot of your Business at a moment in time. UNFORTUNATELY, that is a fully false statement.

HALF of the Balance Sheet is that, but only HALF of it and you wouldn't need all the pieces of the Balance Sheet to calculate that half !?

All you would need is your bank statements and an accurate report on assets and liabilities outside of those.

Hum. What's going on here?

Both of these definitions are defining a Balance Sheet by what the absolute half of it does only? They are claiming a "Company Net Worth Calculation" IS a Balance Sheet and that couldn't be further from the truth.

That is like saying a Peanut Butter and Jelly sandwich is a Peanut Butter Sandwich.

Imagine the surprise when someone were to order a Peanut Butter sandwich and have it delivered with Peanut Butter and Jelly on it.

THEN, imagine the surprise when the person complaining about the Jelly was told they were clearly misunderstood and that all Peanut Butter sandwiches were served with Jelly.

Again. If engineers treated engineering in this manner, we would never have progressed beyond Fire or the Wheel.

So what is a Balance Sheet?

It's a reconciliation tool that provides a data integrity crosscheck that goes beyond statement reconciliation.

Gheez. These "financial experts" aren't even on the right planet...

  1. A Balance Sheet is a mathematical tool that compares your bookkeeping records to known values provided by your banking institutions in attempt to validate your books as having included a comparable set of transactions.

  2. A Balance Sheet is a mathematical tool that MUST have a Start Date and an End Date to be prepared, as the example above clearly specifies. Thus it is not a snapshot in time in any way, shape, or form as the Dogma Preachers proclaim.

  3. A Balance Sheet calculates company net worth TWO DIFFERENT WAYS, and when the TWO WAYS come to the same conclusion, an assumption is made that the bookkeeping records themselves are a mirror of what transpired in their banking accounts, AND that all transactions have been categorized without egregious error.