Is the Balance Sheet always true?

The Balance Sheet never ceases to amaze me!

Much before I got into the world of “ Double Entry Book-keeping”, I was mystified as to how the Balance Sheet of a large organisation having so many accounting entries actually tally. The next doubt which crept up was, if the Assets and Liabilities sides were always equal, did it mean that all organisations were doing well financially and always had assets equal to Liabilities? This, notwithstanding whether Profit or Loss got carried forward from the P & L account?

This was the distant past. Now all of us know that the Balance Sheet reflects the financial health of a company. Well ….. not when one looks at it in isolation but while comparing it with that of the previous year to identify the growth trajectory. The Balance Sheet size does matter.

No, no I do not want to bore you with accounting principles and jargon. All I want to say is that the Balance Sheet gives us some very important lessons of life.

What? That one should lead a controlled life ensuring Liabilities do not exceed Assets? No. Or is it that one should always strive for a Balance in life? Work-life Balance? Maybe.

To me, the Balance Sheet recognizes that nothing is constant in life. Change is the only constant and it is inevitable. How, one may ask? Every Balance Sheet is signed as reflecting the true financial health of any organisation “ AS AT A PARTICULAR DATE” only. It recognizes that the financial situation can change the very next day, week, month or any other date.

This is so true of life too. What we have today in terms of Health, Wealth, Friends, Relatives,Goodwill, Peace, Career may change the next minute. Similarly there could be change resulting in us getting what we do not possess today. None of us is a Nostradamus for sure. Let’s draw up our life’s Balance Sheet at regular intervals and say a silent prayer of thanks, even as we participate in the rat-race.