Economics Insight

• Balance sheet

A balance sheet is a statement showing all the assets, liabilities and owners equity at any given time it is drawn up. A balance sheet maybe produced due to periodic business analysis, to provide (to a lending organisation) an overall picture of the value of the business to take out a loan or to obtain figures to do business ratios. A balance sheet details the values of all the assets and liabilities the business has and the amount of owner’s equity invested in the business.

• Profit and loss statement

A profit and loss statement is a document showing how much money a company earned over a given period of time (usually a year). How we calculate this is by first summing up all the money the company eared over the time and subtract the amount the company incurred as expenses over that time, we get the profit or loss the company made over that period.

One of the significant features in the modern economy is the developing trend of outsourcing. What is out sourcing? it is the precess of handing out parts of operations in an organisation. The most typical of outsourcing is cleaning services in an organisation, while the organisation by itself does not hire personel for cleaning or own any equipment for cleaning its premises, it contracts out that work to another organisation offering such services.Not all out sourcing is this easy to identify, for example an airline ticketing company might outsource maintanance and software security to another company. In this instance while the physicall monitors and desk tops belong to the company the software and security protocolts are under the ownership of another company. The benifits of this could be that the ticketing agency then could focus on hiring people with good marketing skills and not worry about software systems ( which after all the company just wants to sell travell packages, not involuve itself with computer systems maintanance). Out sourcing is not just limited to commerce, some countries have out souced many strategic operations as well, for example Seychells have out sourced their defense and army to French forces. Out sourcing enables organisations to stramline their operations and specilize in a focused area of business.

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