Bus 505: Accounting Principles

Final Assignment

Submitted to:

Professor Dr. Mohammad Istiaq Azim

Submitted By:

Umama Alam

ID: 2125119660

Section: 1

Words count:

 1st question’s answer: 2121 words

 2nd question’s answer: 2485 words

Submission Date: 20th September, 2021

 Answer: to the question: No 1

The most important topic that I have learned in this accounting course is Balance sheet. The
elaboration of Balance Sheet’s details is given below which I have learnt:

Synopsis of Balance Sheet

A balance sheet is a financial summary reporting the assets, statement of financial position of a
firm. The trial balance is one of the key financial documents for the evaluation of a company.

It presents at the time of publishing an

overview of the accounts of a firm (what it
possesses and spends). The objective of the
balance sheet is to show a company's
financial performance at a certain moment.
The quote shows which companies have
(assets) and what they owe (competence)
and the money capital contributed (equity).

The objective of the Balance Sheet

The goal is, to offer an insight into the success or failure that a firm has when the financial report
is internally checked by a successful businessman, key stakeholder or employee. On the basis of
these results a private public can change their strategies and framework: double the results,
rectify shortcomings and focus on new prospects supported by this study.

When someone engaged in a firm reviews an external balance sheet, it is intended to provide
understanding on how a company has finances and how they have been funded. On the basis of
this theory, venture capitalists can evaluate if investing in a firm would be appropriate. Likewise,
crucial measurements like as liquidity, efficiency and liabilities ratios can be taken into account
in the accounts. External auditors, however, might utilize a balance sheet to verify that whatever
monitoring legislation they are subject to complies with.

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 It is vital to keep in mind that at a
particular date a balance sheet
provides information. A balance sheet
is indeed reliant on historical data by
its very nature. While investors and
analysts might anticipate their future
success using the balance sheet, prior
performance is not a prediction of
success results

The Equation of the Balance Sheet

In the following formula the content in a balance sheet is structured almost always:

Assets = Liability + Equity of Owners.

Although this formula is the most frequent balancing

method, it is not the only way to organize the data.
Here are some formulas that we can find:

Equity of owners = Assets - Liabilities

Liability = Assets - Equity of owners

An equilibrium balance should indeed be balanced.

Assets also have to be equivalent in liabilities plus
equity. The equity of proprietors has to be equal to assets except liabilities. Liabilities has to be
equal to assets less equity of owners.

Here is a more detailed examination of what is generally included in each of these value
categories: assets, liabilities and equity.

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1. Property

An asset is defined as everything owned by an enterprise with an intrinsic, measurable worth. If

required a company might transform an asset into cash by means of a winding-up process.

Assets are usually divided into two main categories (current assets and non-current assets) into
positives (+) in the balance sheet. Since companies spend in assets to achieve their tasks, they
need to have an intuitive knowledge of what they are. Without this information the trial balance
and other monetary papers relating to a company's plan might be hard to grasp.

Current Asset Non-Current Asset

Explanation Example Explanation Example
Comprise  Equivalents comprise long-term  Goodwill
everything a firm cash and cash investments which  Intellectual
intends to convert  Expenses should not be turned  Property Land
to cash within one prepayment into cash in the short  Patent
year  Marketable term  Trademarks
securities
inventory
 Admissible
accounts

2. Liabilities

An asset has an obligation to the contrary. If an asset is what a corporation has, it owes an
obligation. The legal and accounting responsibility to pay the debtor a lump sum payment is,
thus, usually shown in a cash flow as negative (-). Just as current or non-current assets are
classified, liabilities are classified as current liabilities or non- current liabilities. The obligations
to deliver products or services in the later may also be included in the liability.

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 Current liabilities Non-current liabilities
Explanation Example Explanation Example
comprise entire  Payroll costs, Comprise any longer-  leases,
debtors' liabilities  Mortgage term loans or  loans,
within one year repayments, payments that are not  bonds payable
 Payment of due within one year  Pension
utilities, arrangement,
 Money  Deferred tax
borrowed, liabilities
 Payable
accounts

3. Equity of owners

The equity of owners, often known as the equity of shareholders, is usually referred to in any
way which belongs to the shareholders following accountability. If all organizational resources
(assets) were added up and all claims were subtracted from external parties (liabilities). The
remaining residue is the capital of the owner.

The equity of owners usually consists of two essential parts.

 The first is the money that is invested in the enterprise in return for some degree of
ownership (typically represented by shares).
 The second is the income generated and retained by the firm over time.

Methods of Presenting Balance Sheet

Types of Balance Sheet

The balance sheet is part of a company's financial statements alerting the client of the quantities
of the company holding at the balance sheet date assets, liabilities and equities. Multiple forms of

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amounts are provided. The more often categorized, common size, vertical and comparative
balances are featured. The following are stated:

The Classified Balance Sheet. This style holds details on the assets, liabilities and equity of a
business grouped into divisions of entities (or "categorized"); It is the most frequent kind of
balancing and consolidates a huge variety of distinct accounts.

Common Size of Balance Sheet. This structures not only the common data in the balance sheet,
but also a column with the same material as a proportion of total assets or a proportion of total
liabilities and equities. The relative changes in multiple accounts' dimensions can be used to
create trend lines.

Comparative Balance sheet. This approach provided next to one another data from several
junctures on an entity's assets, liabilities and equity. The balance sheet might be shown for the
last 3 years by the conclusion of each year. It is helpful to emphasize changes throughout period.

Vertical balance Sheet. The structure of the display of the balance sheet is one column of
figures, starting with elements on the property line, then items on the liability line, and finishing
with things on the equity line of shareholders. Line items must be shown in highest to lowest of
liquidity in each of these divisions.

An Example of Balance Sheet

By examining the example balance sheet below, we may draw sensitive details concerning the
claimed stability of the firm.

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How an Adjustment Balance Sheet Preparate?

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Below are the measures we may take to generate our organization's monetary balance sheet.
Even if any of the procedure is computerized by using a financial reporting system or software,
we will be able to identify any problems before causing serious damage to the balance sheet.

1. Identify the date and period of presenting

On a given day and generally referred to as a reporting date, a balance sheet represents the entire
assets, liabilities and equity of a firm. The final day of the reporting period is often the reporting
date.

Most firms will report on a quarterly basis, particularly publicly listed corporations. The reported
date generally decreases on the last day of the quarter when this happens:

Q1: 31st March

Q2: 30th June

Q3: 30th September

Q4: 31st December

Annual reports are usually issued as a statement of financial position on 31 December, however
companies can pick a date. It is not unusual that a balance sheet to be prepared for many weeks
following the conclusion of the period ending.

2. Recognize the property

We will need to check all assets as from that date, after you have chosen our reporting period and
interval. A cash balance typically lists assets in two distinct ways: as individual items on the line
so as total assets. Dividing assets into several spending categories will find things simpler for
investigators to grasp your assets and where they originated formed, and the overall analysis will
take them together. Current and non-current assets should be subtotaled and combined.

3. Recognize the obligation 

Furthermore, your liabilities will need to be identified. Again, both items and total should be
arranged. Like assets, these should both be subtotaled and summed up jointly.

In this area of the balance sheet, common line items are:

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 Current inventory
Inventory preferred
Stock of treasury
Conserved income

5. Total shareholder equity liabilities and asset comparison

The balance sheet has to be compared with total assets and shareholdings to guarantee a balanced
balance sheet. To do so, you need to combine obligations with equity amongst owners.

Mismanagement in Balance Sheet

If a balance sheet fails, the record has probably been
improperly written. Mistakes generally occur owing to:

 Insufficient or missing data,

 Wrong cash - flow problems,
 Real exchange or stock inventory defects,
 Equity miscalculation, or
 Improper depreciation or repayment.

Conveniences of Balance Sheet

Balancing things

The balance sheet equation indicates that the assets of a firm match its obligations plus the
equity of its shareholders. As this equation must constantly be maintained, any variation from it
shows that accounting systems of the firm are failing. The highly organized balance sheet format
divides the three key elements into a series of accounts at a certain time with dollar amounts.

Ratio’s calculation and analysis

Several of the advantages of the balance sheet is that managers, investors, lenders and regulators
assess a business using balance sheet data, typically together with other documents, such the

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income statement, to calculate financial ratio analysis. For instance, the balancing data is used to
assess cash that is the corporation's capacity to pay its present invoices by splitting current assets
into current liabilities (the current ratio).

Lending and financial acquisition

The necessity of a budget is especially apparent if a company needs credit or loan lines. The
creditor will probably need a balance sheet to examine the creditworthiness and financial
position of a firm before a credit institution lends money or extends credits to an innovative
growth enterprise.

Balance Sheet Shortcomings

Long-term misappropriations Long-term assets should last for longer than a year and contain
goods like estate, machinery and installations. The balance sheet defines the amount of long-term
assets, known as their historical or book value, at the price paid. The current value of the assets is
ignored as part of the balance sheet limit. Any return or the money it would take in substituting
the asset at accumulate over time is ignored in the
balance sheet.

Lost Assets The balance sheet only reports assets

obtained via transactions. It thereby fails to mention
certain hugely important assets which are not
transactional or financial

How significant Balance sheets are for Evaluation

There are few more financial statements than the balance sheet when it comes to understanding a
firm. The balance sheet provides a vital insight into the condition of the organization:

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  Possible investors to consider if investing in an organization
 Corporate owners develop more successful company's structure
 Professionals adapt their procedures to achieve joint business objectives

Whether being a business owner, a client or an entrepreneur, it is a crucial financial bookkeeping

ability to grasp how to analyze and comprehend details on a balance sheet.

 For a successful entrepreneur, supervisor or potential investor, the information on a

corporate balance sheet is among the most understandable. It might be hard to know if a
firm strives and grows, without this information, therefore it is important for everyone
interested in business to learn how to read and to grasp a balance sheet.
 At the same period, the balance sheet is a picture of the assets and liabilities of a firm not
stretched across a year, as in the analyzed by calculating. The financial statement
provides a lot of key information that is more necessary to comprehend the sustainability
and commercial relationships of an enterprise.
 The most important causes, however, are balance sheets: if a merger is considered, if an
enterprise needs to consider liquidated assets to support loans, if an investment firm takes
a position within an investment firm and if a firm is interested in deciding whether they
are in a reliable economic state to expand, or start to repay debts. The balance sheets are
important for many reasons. The cash is considered by many experts to be the key
component in a business accounting records.

So that’s why think this is the most valuable learning for me

Answer: to the question: No 2

Scams of Evaly

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In just a few months, Evaly was becoming Bangladesh's largest online and mobile business and
hardly anyone expects this achievement. This had given small and medium-sized companies
various commercial possibilities to utilize modern technologies to compete more effectively at
home and beyond.

This research tries to discuss some critical insights

taken by Evaly that leads cheating and frauds in e-
commerce

Business Structure
Evaly is an e-commerce platform that can provide each consumer in Bangladesh with any sort of
items and products from each industry. A smartphone/computer and internet connection will just
be fingertips away for every client on the international market.

Anyone can buy everything from a security pin to a

condominium on their webpage. They have
assembled Bangladesh's luster brains and provided
them with the forum to do everything possible. All
mining techniques and optimization were done
inside, and no exporting was carried out. E-
Commerce System Provider to deliver supplies, foodstuffs, categories, accounts and illustrates
the value. The platform gives clients with the abilities to reach all items on one unified system
and a large selection of products for food, groceries, technology, apparel and other things of that
nature.

Evaly's Business strategy

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Evaly is working on a strategy for the trade.
Those of us that have been active since the
start in the e-commerce sector and who have
tried to look in depth at recent developments
can easily foresee that there is certainly
going to be a revolutionary change in the e-
commerce market in the effect of cultural
divides. It should be important to reassess a
comprehensive strategy and operation of
disturbing, high-speed and contentious firms such as the current Proprioceptive Evaly, to identify
errors in a civil manner but also to replicate success elements in other organizations. In order to
interact with its client, Evaly develops its own approach. They create their communications
protocol so easily that it fits all customers. As a relatively simple approach, it creates a more
satisfied and loyal experience for customers.

Blue Ocean Strategy:

Bangladesh has 2000 to medium-sized e-commerce platforms and over 50.000 ecommerce
companies per the Financial Express. Resulting in low entrance barrier, practically everybody
uses the same product and offer to the same client, which causes
tremendous impasse on the fixed market.

Blue Ocean is an undiscovered unquestioned field with infinite

opportunities for performance of the company and full useless opposition.

Evaly - A Limited Blue Ocean Strategy

Evaly's marketing strategy is consistent with the Blue Ocean strategy. It

produced a major reaction in just a year and a half, earning impressive
revenue growth on unusual offerings, stirring adversaries and provoking
controversy after controversy.

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Even if many know the term blue ocean, most successful businesses may not grasp its essential
characteristics.

Blue Ocean Strategy Foundation – Value Innovation

The central emphasis of the Blue Ocean strategy is the creative approach to offering the
consumer that which is highly useful. Creativity is referred to as value.

Before Evaly, the traditional thought was that the ordinary consumer would not buy more than
Tk 1k-3k digitally. Again, a lot of big online businesses with bluster on website got a discount of
up to 70%.

Where another prevalent perception was that no one needs to purchase pricey items online,
assessment has come out with large discount offers on the millions of taka worth of products,
and it is not a luring. In an interview with the CEO of Evaly, Mohammod Rassel talked about
20K of average bucket size from their clients a year ago.

It is feasible, as indicated above, to redefine current goods and offerings and to extend the market
boundaries by increasing demand via value + innovation, utilizing the Blue Ocean Strategy
framework.

Income Generation Methods in the 1st Year

Evaly is a digital website where vendors and clients may deal directly with others. Evaly
promoted at the beginning vendors on various platforms, and customers can engage these
vendors directly. They neither produced nor was responsible for any goods offered on its site.
From the start Evaly offered free adhesion to attract customers to the e-commerce market, which
had become the essential skills and contributes to enhancing business chances. Evaly offered free
subscription to entice customers from the very start. Two main elements of Evaly encountered
the following profit. Evaly also introduced a discount to boost sales and keep consumers in their
first year.

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They shipped discounts were granted providing those
buyers buy bulk or festival items. Another method of
cash generation is the contract with various renounced
belt and the sale of its product on a commission basis
such as a deal with Samsung, VIVO and 1Plus. E-valy
additionally strived to provide a differentiated product to
draw people, and if they succeed then it makes them
lucrative and affordable to retain themselves in such a
saturated market. In this way, Evaly added genuine value
to an incredibly restricted supply of time. Evaly had
consumed a good deal of capital and give enormous discounts, which many other digital
commerce firms cannot afford.

Wrong methods Sales and marketing of Evaly

Evaly was determined to make its existing business strategy is long-term viable and lucrative.
The methods were:

1. Enhance customer numbers

At first, they converted a non-customer into a client by offering a compelling solution. Then the
goods or service must be used so as to use the product without any discount at a later date. The
commodity that is given at a bargain is not a need to attract many new consumers in a brief
moment and to show enormous growth. But there are unbelievable costs for customers for every
consumer. As a consequence, the first business law has been effectively accomplished for such
time being under the existing business model of Evaly, but it is impossible to keep the following
two.

2. Enhance the regular worth of the trade

Since Evaly spends a lot to initially buy a client, the next stage is to cover it entirely and then
earn revenue. However, the problem was that it had established its own unique selling
proposition as a 'sizeable discount site.'

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3. Enhance the repurchase frequency

Evaly's business strategy might be fatally vulnerable here. It is questionable if the whole affair is
subject to a precise plan, strategy or coordination. Worryingly, the firm takes a variety of
desperate efforts to do this, creating issues illegally obligatory.

E.g., Evaly Wallet deposits

discount or rebate cash. Evaly,
deliberately or unwittingly, had
produced virtual money that was
contrary to the Bangladesh Bank
legislation.

4. Provide so much discount:

Evaly was working on discount

concept in the marketplace. That
indicates that they had no
product of themselves, that they collect the retailer's commission. With volume purchases and
scale savings, Evaly should contract with the merchant a better price but they did not. Many
clients began complaining in 2021 that they did not receive a product that makes them
fraudulent.

Evaly’s Hasty Implement Policies

1. Create a different value

Evaly introduced new products to an incredibly complete package by providing the client a
saleable product of their passion with tempting discounts. If we were here attempting to provide
enormous discounts for lower cost items, but we wouldn't call it an invention of value since that's

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what a lot of others do. Thus, by integrating enormous discounts, liquidity crises and gaming,
there would be a big stirring impact.

2. Aspects from traditional standard are entirely erased

Almost anyone in Bangladesh provides e commerce Cash on Delivery. Its client was considered
given, yet to companies it is highly detrimental. False instructions across all sides, activities,
investments.

Evaly used this to construct new demand through value innovation beyond conventional belief.
This led to an offer campaign of 24 hours 'Cyclone' type with more bookings than the products
offered with immediate settlement.

3. Decrease to a Factor Industry Standard below

One of Evaly's concerns was that it took the delivery time to an insupportable degree. The
corporation thereby receives certain unjustified monetary and time benefits that it uses extremely
efficiently in the expansion of businesses. In the aim to receive costly product discounts, the
client may be compelled to endure for the time being, but in the long-term brand construction is
badly damaged.

Frauds of Evaly
Evali CEO, Russell and his wife, Shamima (chairman), have been arrested in 16th September
2021. At the same time, RAB are trying to find out where and in what condition the huge
amount of money taken from the customer is. They are being interrogated about concerning the
customers who have filed the case alleging fraud. At the same time, they are trying to find out
where the huge amount of money taken from the customer is.

 Evaly invests cash:

Evaly takes develop cash from clients, however provides the product after extra than 1
month to 3 months. This time they 'profit' through making an investment that cash
somewhere else after which supply the products to the clients with that cash. In some

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 cases, they may get more rewards, and in cases, they may lose all rewards. Since Evaly
started trading, their exchange has been in a state of collapse.
 Possibility of Money Laundering:
Mohammad Russell and his wife Shamima are being questioned on remand. Shadow
has started investigation. If any evidence of money laundering is found, they will be
prosecuted under the Money Laundering Act.
So far, no sign of money laundering
through banks has been found
 Pending the huge order
Internet enterprise selling employer
Evaly is taking installments in advance
of time from its clients, but now no
longer conveying its gadgets on
schedule. Clients are placing orders, but
frequently get a few unacceptable gadgets. Likewise, terrible great product is in any
occasion, being conveyed.
In the occasion that an object isn't always conveyed, Evaly is wanted to bargain the
client's cash.
 Bangladesh Bank’s confession:
Evaly's client and dealer obligations have increased to Tk403.80, but its cash and cash
equivalents amount only to Tk65.17 crore.
Evaly did not send items in advance payments from consumers for a combined value of
Tk213.94 crore till 14 March this year. In addition, the firm owes to the retailers it
purchased goods Tk189.85 crore.
To settle prior debts and offset losses eligible for
reimbursement, Evaly generates revenue from its
clients by enticing them with a number of tempting
offers - like as 'Cyclone,' 'Earthquake,' etc. Increased
items and other offerings for the firm are continually
being offered for new consumers, expanding the
discrepancy between its income and expenses.

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 Reasons behind the Scam
'One Man Show' Policy

"One Man Show" in Evali was claimed by RAB. RAB Law Director Khandaker Al Moin
remarked in a news conference: "Evali is a schedule family-owned business. It is a family
business. It's been 'One Man Show.' Russell himself did it all at his own discretion. With his
organization, no one else was engaged."

Policy on advance payment

After money was made in advance Evaly could not deliver items on schedule. Evaly doesn't give
back the money from cash back and keeps it in her 'wallets.' Moreover, consumers cannot utilize
100% of their money from the Company. They never use ‘cash on delivery’ process.

Discount Policy Excessive Use

To entice people, Evaly sells items at affordable rates. With the clients' advance payments, the
firm paid its suppliers' duties. They also organize their work resources from the funds of their
clients. The majority number of registered consumers encountered or did not have their items
received extended schedule delays.

The FlyWheel Path

Evaly has been the first step to Evaly.com.bd, which means it is popular to visit all. Evaly is the
first step. That's luring sellers. Evaly nevertheless pushes the flywheel to show the customers the
cash bag. With the initial flywheel idea Evaly integrates trading plan extremely effectively.
Evaly's not going to survive longer after holding the money. Due to the fact that Evaly does not
concentrate on consumer satisfaction.

Unethical mentality:

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Evaly is utilizing the Diamond World brand and logo to advertise and showcase jewelry items on
its webpage and on various digital platforms. The costs against the marketing business are
charged to Evaly at the cost of Diamond World and its consumers. Diamond World Media and
marketing leader Mehedi Hasan warned them about the problem previously, but they didn’t
bother of it.

Making up loans from customers’ money

Evaly earns revenues from its customers by encouraging them with a series of exciting offers to
clear previous debts and balance losses eligible for reimbursement, such 'Cyclone,' 'Earthquake,'
etc. The company is constantly giving more products and other offers to new clients, increasing
the disparity between its revenues and expenditures.

Missing Control
Establishment of responsibility:

With the hotline number, e-mail and social media platforms, Evaly is not communicating with its
consumers which is irresponsibility. After paying in advance, they were unable to deliver items
in time. Moreover, consumers cannot utilize 100% of their money from the Company. MD
Rassel concealed it since certain observers did not conduct any crime.

Segregation of Duties

After taking remand of MD and chairperson, it is revealed that Evaly doesn’t share responsibility
for a major process that divides more than one person from the important duties of that process.
In here. It's been 'One Man Show.' Russell himself did it all at his own discretion. With his
organization, no one else was engaged.

Independent Internal Verifications

The Public Safety Division of the Home Office has sent a statement on this Evaly behavior to the
Commerce Department. The study was created following an analysis of existing legislation and a

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discussion with clients who paid advance payments, did not get their goods or obtain their cash.
Instead of upfront payment, Evaly was suggested to implement a 'cash on delivery' approach. But
the MD way too busy in making the ‘observation’ instead of paying attention of advice.

Human Resource Control

As Evaly is considered as family-owned business, the authority themselves execute itself as per
their choice. There had no 3rd party to conduct background checks and handle cash. So they use
the cash for their luxury

Conclusion
The E-Commerce Association of Bangladesh (E-CAB), a group of e-commerce firms, believes
Russell and his wife Shamima's detention is not the end of the story. They believe Evali has an
opportunity to change his ways. ‘Customers must be patient,' said E-Cab Vice President
Mohammad Sahab Uddin. He thinks that excellent news may be obtained via legitimate
methods. Evelyn may yet have a chance to reverse their mind. Clients who have been subjected
to a tax will be compensated if they file a complaint with the Department of Conservation.
Consumer rights are always available to victims of e-commerce companies. "But they wanted
time to overcome," he stated in support of providing time. They undoubtedly have such
intentions. Even yet, it is impossible to predict what will happen now that the case has gone to
court.” As a result, there is no assurance that Evaly will rise.

Reference

https://www.investopedia.com/ask/answers/050615/what-items-balance-sheet-are-most-
important-fundamental-analysis.asp

https://online.hbs.edu/blog/post/how-to-read-a-balance-sheet

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https://www.accountingtools.com/articles/what-balance-sheet-formats-are-available.html

https://www.ideanconsulting.com/the-curious-case-of-evaly/

https://www.ideanconsulting.com/the-curious-case-of-evaly-part-2/

http://dspace.daffodilvarsity.edu.bd:8080/bitstream/handle/123456789/5772/172-45-
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https://en.prothomalo.com/business/local/evaly-violates-the-law