The preparation of Balance sheet gives following advantages:
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- It is helpful in ascertaining the financial position of the business by showing assets and liabilities of the concern on a specific date.
- It discloses the solvency of business by showing how much assets are available for payment of liabilities.
- It also disclose the proprietary interest of owner.
- It helps in calculation of various ratios which help in better management of business.
- It helps in comparison of assets and liabilities of business on two dates to ascertain the progress being made by business.
- It helps to ascertain the amount of capital employed in business.