Balance sheet may be defined as the financial statement that summarizes the financial position of the business at a given point in time. It may also be defined as the statement that describes the sources of funds (liabilities) and the uses of these funds (assets) so in other words the balance sheet gives the financial picture as:
Total Assets = Total Liabilities + Total Capital
As mentioned the Main features or elements of a balance sheet include:
Assets - are the possessions of the company or a business these can be of various types such as fixed-assets which include land and machinery, the current assets are those which are easily converted into cash and include- cash, stocks, receivables etc.
Liabilities - is the debt of the company. These are also of different types such as current liabilities which includes accounts payable, short-term debt etc. Similarly liabilities can be of intermediate term and long term.Capital/Equity - represents the ownership of the business in terms of shares or stocks.So on the whole, the balance sheet portrays a good picture of the financial position of a firm.
A balance sheet shows the financial position of the accounting entity on a specific date. A balance sheet is always dated as of a certain date. For example, the balance sheet as of December 31, 1992 shows the entity's financial position as of the end of 1992. A balance sheet as of January 31 shows the financial position as of the end of January.
We shall start to prepare a balance sheet for Computer Solutions, using the following format.
Note that the balance sheet has two sides. The left-hand side is called the assets side. Amounts listed on that side show the resources owned by the entity. The right-hand side is called the equities side.
The amounts shown on the right-hand side can be explained in either of two ways; both are correct. In one view, equities are claims against the assets. In the other view, equities show the amount of funds that have been supplied to the entity from various sources. As you proceed, you may find that one of these views makes more sense to you than the other. Use that one.
Balance Sheet is a list of the accounts having debit balance or credit balance in the ledger. On one side it shows the accounts that have a debit balance and on the other side the accounts that have a credit balance. The purpose of a balance sheet is to show a true and fair financial position of a business at a particular date. Every business prepares a balance sheet at the end of the accounting year.
Balance Sheet has the following features:It is the last stage of Final Accounts.
It is prepared on the last day of an accounting year.It is not an account under the Double Entry System---it is a statement only.It has two sides--left-hand side known as asset side and right-hand side known as liabilities side.
The totals of both sides are always equal.The balance of all Asset accounts and liability accounts are shown in it. No expense accounts and revenue accounts are shown here.It discloses the financial condition and solvency of the business.It is prepared after the preparation of Trading and Loss A/C because the net profit or net loss of a concern is included in it through Capital A/C.
There are four basic financial statements, and balance sheet is one of them. But a balance sheet is the only one financial statement which gives information of a single point in time.
A balance sheet or statement of financial position is used in the terms from financial accounting. A balance sheet is a summary of an organization's balances that take into account its assets, liabilities and equity. A balance sheet is sometimes described as a snapshot of a company's financial condition.
It has three parts 1. Assets 2. Liabilities 3. Ownership equity.
An equation can be used that is
Assets + liabilities= Net worth(ownership equity)
-A Balance Sheet is a financial statement that show the financial position of a person or business on a particular date.
-There two kinds of BS.
-One is the original BS:
First, you'll have the name of the business, the name of the financial statement(BS), and the date when the financial position is determined.
Second,you'll have the Asset on the left, then list the Liabilities and Owner's Equity on the right.
-The other is in "report form":
The top is the same as the original one.
But, for this BS,the A section is placed on the top of the L and OE sections instead of beside them!!
**Remember: You have to ensure that every BS has to be balanced!!!
The short answer is it has two columns for debits and credits listing your assets, liabilities, and equity in the business. Hope this helps answer your question.