Download Balance Sheet sample format below
What is a Balance Sheet?
A balance sheet is a statement that shows the summary of assets ad liabilities in a well arranged form, so that the financial position may be clearly ascertained.
The assets are set out in order of permanence or liquidity.
Key Components of a Balance Sheet
Fixed assets: These are assets of the business which are of permanent in nature and crates revenue for the business. Land and building, plants, and furniture are good examples of fixed assets.
Current assets: these are assets that can last for a short period of time. A good example is stock of goods, cash in hand etc. Current assets are easily realizable.
Long term liabilities: These are obligations of a long term nature, most times expected to be paid after one year. They are liabilities payable in the future.
Current liabilities: These are obligations which are payable within a short period usually within a year. They are events that require the enterprise to pay money and provide goods or perform services which are due. A good example are creditors, loan, overdrafts.
Capital: The business is financed by capital isn’t it? Capital is simply the owners interest in the assets of the business. It can be referred to as owners equity or proprietorship.
Capital = Assets – Liabilities