Balance Sheet

A Balance Sheet is a detailed A Balance Sheet is a detailed expression of the accounting expression of the accounting equation for a business at a certain equation for a business at a certain point in time. It is a major report point in time. It is a major report that lists the various asset, liability that lists the various asset, liability and owner’s equity items.and owner’s equity items.

• usually presented in the form of the accounting equation A – L = OE

• prepared after Income Statement – net profit/loss is included in the Owner’s Equity section

• assets are listed in order of liquidity – those assets most easily converted into cash are listed first

• liabilities are listed in the order they would be repaid – those repaid quickest are listed first down to those taking longer to repay last

• all accounts provided in the sheet are listed with their final balances except for the capital a/c

• the capital a/c lists the balance at the beginning of the period and indicates net profit and drawings for the period resulting in the closing capital balance