An applicant company opened its doors in January. The applicant says they have no financial information. My boss told me to ask them to provide an opening balance sheet. They said they did not have one. My boss responded: Do not sell to them. What is the significance of an opening balance sheet?

Answer: An opening balance sheet shows the initial investment and what was purchased with it. It is valuable to the business owner to track the return on their investment. The lack of an opening balance sheet is an indication of a lack of sophistication on the part of the business owner.