Professional Documents
Culture Documents
AIBS
MIB, Semester 1 Accounting and Finance Navneet Saxena
Objective
Balance Sheet
Balance Sheet
A Balance Sheet is one of the financial statements A Balance Sheet is a statement of assets and liabilities of an enterprise at a given date It is called a Balance Sheet because it is a sheet of balances of those ledger accounts which have not been closed till the preparation of the Trading and Profit and Loss Account
Characteristics
A Balance Sheet is only a statement and not an account It has no debit side or credit side The headings of the two sides are Assets and Liabilities A Balance Sheet is prepared at a particular point of time and not for a particular period
Characteristics
The information contained in a Balance Sheet is true only at the particular point of time at which it is prepared A Balance Sheet is a summary of balances of those ledger accounts which have not been closed by transfer to the Trading and Profit and Loss Account A Balance Sheet shows the nature and value of assets and the nature and the amount of liabilities at a given date
To ascertain the nature and value of assets of a business To ascertain the nature and amount of liabilities of a business To find out the financial solvency of an enterprise
An enterprise is considered to be solvent if its assets exceed its external liabilities
Grouping putting together items of a similar nature under a common heading Marshalling order in which the various assets and liabilities are shown in the Balance Sheet The assets and liabilities can be shown either in the
Order of liquidity Order of permanency
Recap
Balance Sheet
Next Session
Final Accounts