Timely financial data is essential to
decision-making. Without proper tracking
systems, brokerages are unable to accurately
monitor sales performance, branch office
profit levels, and true production expenses,
to mention a few. A basic understanding of
accounting is required so that proper
forecasting and tracking systems can be
developed and implemented.
The balance sheet lists in order all
assets, liabilities, and equity of a
business as of a specific point in time. As
such, this financial statement provides a
snapshot portrayal of a particular business
operation. Within each major classification,
subheadings appear and under these
subheadings, the individual accounts. In
examining a balance sheet, the following
equation applies:
Total Assets = Total Liabilities
+ Shareholders’ Equity
This relationship exists because all
debits must equal all credits in the
accounting system.
Items used in the business, including
anything of future use to that enterprise,
the beneficial interest of which is part of
that business. They may be monetary or
non-monetary, tangible or intangible, and
either current or non-current.
Different classes of shares in the
corporation that can be issued.
Retained Earnings
The accumulated net income of a
corporation since the inception less any
distribution of dividends. If the company is
in a loss position, it is termed a deficit.
Year end financial statements will include a
statement of retained earnings, either as a
separate financial statement or combined
with the profit and loss statement.
The analysis of net increase or decrease
in working capital. The change in financial
position discloses the net change in each
element of working capital. This statement
provides the brokerage with valuable
information as it shows the source of cash
used to effect changes to the balance sheet
accounts, such as purchasing new assets and
retiring long-term commitments.
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