In this lesson, we discussing Balance Sheet as it is considered as a snapshot of the company and give us the idea about the financial position of the business and tell the company what they own and owes.
Balance Sheet Definition Format + Example 2018
The balance sheet is the list of assets and claims of business prepared at some specific point in time. It shows the financial position of the business sheet. A balance sheet shows the assets and liabilities grouped, properly classified and arranged in a specific manner. It normally prepared at the close of each financial year.
let us talk about the format. It can be presented in two ways
- Account format
- report format
Balance Sheet Format
It contains 2 columns
- Assets side
- Liabilities and owner’s equity side
- Currents assets (cash, debtors Etc)
- Non-current assets ( goodwill, trademarks etc)
- Fixed assets (land building, machinery etc)
Liabilities and owner equity side
- Short term (overdraft, accrued exp.)
- Long-term (mortgage loan)
Proprietor value Amount contributed by the proprietor of the business.
There are two types of showing resources, liabilities and proprietors' value to be decided sheet – account configuration and report design. In record design, the asset report is isolated into left and right sides like a T account. The benefits are recorded on the left-hand side while the two liabilities and proprietors' value are recorded on the right-hand side of the accounting report. In the event that every one of the components of the accounting report are accurately recorded, the aggregate of benefit side (i.e., left side) must be equivalent to the aggregate of liabilities and proprietors' value side
The monetary record is a snap, speaking to the condition of an organization's funds at a moment in time. Without anyone else's input, it can't give a feeling of the patterns that are happening over a more extended period. Hence, the asset report ought to be contrasted and those of past periods. It ought to likewise be connected with those of different organizations in a similar industry since various ventures have remarkable ways to deal with financing.