Balance Sheet
A balance sheet tells about the assets, liabilities and equity of a business at a specific point of time.
It is a snapshot of a business.
A balance sheet is an extended form of the accounting equation. An accounting equation is:
Assets = Liabilities + Equity
A balance sheet is named so because it lists all resources owned by the company and shows that it is
equal to the sum of all liabilities and the equity balance.
Assets are the resources controlled by a business. Equity is the obligation of the company to its
owner. Liabilities are the obligations to parties other than owners.
A balance sheet can be presented in account form or report form.
An account form balance sheet is just like a T-account listing assets on the debit side and equity and
liabilities on the right hand side. See example below.
A report form balance sheet lists assets followed by liabilities and equity in vertical format.
The following example shows a simple account form balance sheet of Company A.
Company A
Balance Sheet
As on December 31, 2012
ASSETS
Current Assets:
Cash
Accounts Receivable
Office Supplies
Prepaid Rent
Total Current Assets
Non-Current Assets:
Equipment
Accumulated Depreciation
Net Non-Current Assets
Total Assets
$20,430
5,900
4,320
24,000
$54,650
$80,000
−1,100
$78,900
$133,550
LIABILITIES AND EQUITY
Liabilities:
Accounts Payable
Utilities Payable
Unearned Revenue
Interest Payable
Notes Payable
Total Liabilities
Common Stock
Retained Earnings
$5,200
3,964
1,000
150
20,000
$30,314
100,000
3,236
Total Liabilities and Equity
$133,550