balance sheet
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Sarbanes-Oxley - Sarbanes–Oxley Section 401: Disclosures in periodic reports (Off-balance sheet items)
1 Sarbanes-Oxley required the disclosure of all material off-balance sheet items
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Recession - Balance sheet recession
1 In a balance sheet recession, GDP declines by the amount of debt
repayment and un-borrowed individual savings, leaving
government stimulus spending as the primary
remedy.[http://www.paecon.net/PAEReview/issue58/Koo58.pdf Richard Koo
– The World In Balance Sheet Recession – Real World Economics
Review – December 2011]https://store.theartofservice.com/the-balance-sheet-toolkit.html
Recession - Balance sheet recession
1 In more technical terms, Krugman argues that the private sector savings curve is elastic even during a balance sheet recession (responsive to changes in real interest rates) disagreeing with Koo's view that
it is inelastic (non-responsive to changes in real interest
rates).[http://krugman.blogs.nytimes.com/2010/08/17/notes-on-koo-wonkish/ NYT – Paul Krugman –
Notes on Koo – August 2010][http://www.voxeu.org/article/debt-
deleveraging-and-liquidity-trap-new-model VOX – Paul Krugman – Debt, Deleveraging and the Liquidity
Trap – November 18, 2010]
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Recession - Balance sheet recession
1 A July 2012 survey of balance sheet recession research reported that
consumer demand and employment are affected by Household debt|
household leverage levels
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Japanese asset price bubble - Household/Corporate balance sheet
1 It was important to note that since the prices of assets tumbled,
increasing liabilities on long term basis projected a bad balance sheet
to investors
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Balance sheet - Types
1 A balance sheet is often presented alongside one for a different point in time (typically the previous year) for
comparison.
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Balance sheet - Personal balance sheet
1 A personal balance sheet lists current assets such as cash in checking
accounts and savings accounts, long-term assets such as common stock and real estate, current liabilities such as loan debt and mortgage
loan|mortgage debt due, or overdue, long-term liabilities such as
mortgage and other loan debt
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Balance sheet - US small business balance sheet
1 A small business balance sheet lists current assets such as cash,
accounts receivable, and inventory, fixed assets such as land, buildings,
and equipment, intangible assets such as patents, and liabilities such
as accounts payable, accrued expenses, and long-term debt
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Balance sheet - Public Business Entities balance sheet structure
1 Government organizations do not generally follow standards established for individuals or
businesses.[http://www.finance.uvic.ca/accounts/bsvsop.shtml University of Victoria (Canada)
balance sheet accounts][http://www.comptroller.state.al.us/pdf
s/ChartofAccts/bacc.pdf STATE OF ALABAMA CHART OF
ACCOUNTS][http://www3.dps.ny.gov/N/nycrr16.nsf/Parts/763994601AEFFF5A85256FC80060B523
?OpenDocument New York State (USA) public utilities balance sheet accounts]
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Balance sheet - Equity
1 The net assets shown by the balance sheet equals the third part of the
balance sheet, which is known as the shareholders' equity. It comprises::
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Balance sheet - Equity
1 Records of the values of each account in the balance sheet are
maintained using a system of accounting known as double-entry
bookkeeping
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Balance sheet - Balance sheet substantiation
1 Balance Sheet Substantiation is the accounting process conducted by
businesses on a regular basis to confirm that the balances held in the primary accounting system of record (e.g. SAP
ERP|SAP, Oracle Database|Oracle, other ERP system's General Ledger) are
reconciled (in balance with) with the balance and transaction records held in the same or supporting sub-systems.
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Balance sheet - Balance sheet substantiation
1 Balance Sheet Substantiation includes multiple processes including Bank reconciliation|reconciliation (at a
transactional or at a balance level) of the account, a process of review of the
reconciliation and any pertinent supporting documentation and a formal certification (sign-off) of the account in
a predetermined form driven by corporate policy.
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Balance sheet - Balance sheet substantiation
1 Balance Sheet Substantiation is an important process that is typically carried out on a monthly, quarterly and year-end basis. The results help to drive the regulatory balance sheet
reporting obligations of the organization.
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Balance sheet - Balance sheet substantiation
1 These solutions are suitable for organizations with a high volume of accounts and/or personnel involved in the Balance Sheet Substantiation
process and can be used to drive efficiencies, improve transparency
(behavior)|transparency and help to reduce risk.
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Balance sheet - Balance sheet substantiation
1 Balance Sheet Substantiation is a key control process in the SOX 404 top-down risk
assessment.
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Balance sheet - Sample balance sheet
1 The following balance sheet is a very brief example prepared in accordance with IFRS. It does not show all possible
kinds of assets, liabilities and equity, but it shows the most usual ones. Because it shows Goodwill (accounting)|goodwill, it
could be a Consolidated financial statement|consolidated balance sheet.
Monetary values are not shown, summary (total) rows are missing as well.
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Knowledge Balance Sheet - Criticism
1 * connection between knowledge balance sheet and future revenue opportunities
difficult to verify
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Off-balance sheet - Differences between on- and off-balance sheets
1 Therefore, two types of items are of interest: on-balance sheet and off-balance sheet
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Off-balance sheet - The Banking Example
1 A bank may have substantial sums in off-balance sheet accounts, and the distinction between these accounts
may not seem obvious
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Off-balance sheet - The Banking Example
1 As an example UBS has CHF 60.31 billion Undrawn irrevocable credit facilities off its balance sheet in
2008 (USD 60.37 billion.) [http://www.ubs.com/global/en/about_ubs/investor_relations/annualreporti
ng/archive.html UBS 2008 Annual Report]
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Off-balance sheet - The Banking Example
1 Citibank has USD $960 billion in off-balance sheet assets in 2010, which
amounts to 6% of the GDP of the United
States.[http://emac.blogs.foxbusiness.com/2010/07/15/pandit-speaks
Pandit Speaks, Fox Business]
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Federal Reserve responses to the subprime crisis - Expansion of Fed Balance Sheet (Credit easing)
1 Ben Bernanke called this approach credit easing, possibly to distinguish it from the widely used
expression Quantitative easing, which however originally also referred to the expansion of credit
creation (reference: Richard Werner, Keizai Kyoshitsu: Keiki kaifuku, Ryoteiki kinyu kanwa kara, Nikkei,
Nihon Keizai Shinbun, 2 September 1995) .[http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm Bernanke-The Crisis and the
Policy Response] In a March 2009 interview, he stated that the expansion of the Fed balance sheet was
necessary ...because our economy is very weak and inflation is very low
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Federal Reserve responses to the subprime crisis - Expansion of Fed Balance Sheet (Credit easing)
1 Both the actual and authorized size of the Fed balance sheet (i.e., the
amount it is allowed to borrow from the Treasury to lend) was increased significantly during the crisis. The
money created was funneled through certain financial institutions, which
use it to lend to corporations issuing the financial instruments that serve as collateral. The type or scope of assets eligible to be collateral for
such loans has expanded throughout the crisis.
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Federal Reserve responses to the subprime crisis - Expansion of Fed Balance Sheet (Credit easing)
1 In March 2009, the Federal Open Market Committee (FOMC) decided to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional
$750 billion of government-sponsored agency mortgage-backed securities, bringing its total purchases of these
securities to up to $1.25 trillion during 2009, and to increase its purchases of agency debt this year by up to $100 billion to a
total of up to $200 billionhttps://store.theartofservice.com/the-balance-sheet-toolkit.html
Ivar Kreuger - Off Balance Sheet Entities
1 He said it is only customary to consolidate the assets and liabilities
of companies in such a balance sheet when a substantial majority of the
outstanding shares are owned by the parent company
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Balance sheet substantiation
1 Of the three basic financial statements, the balance sheet is the
only statement which applies to a single point in time of a business'
calendar year.
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Balance sheet substantiation
1 A standard company balance sheet has three parts: assets, liabilities and
ownership equity. The main categories of assets are usually listed
first, and typically in order of liquidity. Assets are followed by the
liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or financial capital|capital of the company and according to the
accounting equation, net worth must equal assets minus
liabilities.Williams, p.50
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Balance sheet substantiation
1 Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity. Looking at the equation
in this way shows how assets were financed: either by borrowing money
(liability) or by using the owner's money (owner's or shareholders' equity). Balance sheets are usually presented with assets in one section and liabilities and net worth in
the other section with the two sections balancing.
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Economic recession - Balance sheet recession
1 Economist Paul Krugman wrote in 2014 that the best working
hypothesis seems to be that the subprime mortgage crisis|financial
crisis was only one manifestation of a broader problem of excessive debt--that it was a so-called balance sheet
recession
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