Before establishing the correctness of the balance sheet as an evaluation tool, it is important to understand that producing a document that shows the exact value of a company is practically impossible. The combination of all assets, liabilities, owners' equity and many other factors must be calculated to reach a final value. However, the methods used in valuation, constant changes in the economy and inflation make the value of the company itself a constantly changing figure. Therefore, if an accurate value of the company were to be produced, it would only be accurate at the time it was produced. In this essay I will discuss the different aspects of the budget and how the way they are presented affects the budget numbers. But first of all it is important to understand what the budget consists of and the role it is intended to play. The balance sheet is a financial document in which the assets and liabilities of a company are identified. Subtracting assets from liabilities calculates net worth, this is a key indicator of the company's value to its owners. It shows the financial situation of the company on a particular date, “it is a snapshot of the business and is the best measure we have for assessing financial health”. However, the fact that it is a snapshot means that it is valid only at the time it is produced, so it may not represent a true and fair view. It is possible for a company to choose a particular day on which to benefit. The balance sheet can be used to determine how much credit a company will get or whether to invest or less in it, it is therefore a very important document and managers are aware of this. It is therefore possible that companies seek to format information and calculate figures using methods that present a better financial picture. The opportunity to adopt creative accounting occurs when choices are made on the basis of depreciation,. of inventory and cost of goods sold. The methods used to calculate these figures can make a fundamental difference to the balance sheet. The accuracy of the valuation within the financial statements is a key point to consider as the various methods used for the calculation lead to significantly different results. Cost capitalization occurs when a cost is treated as an asset rather than an expense, thus increasing total assets.