Method of Preparation of Balance Sheet:

All the information necessary for the preparation of balance sheet

is available from trial balance and from some other ledger
accounts. After transferring accounts relating to expenses and
revenues to trading and profit and loss account, the trail balance
contains only the accounts of assets, liabilities, and capital. All
assets have debit balances and all liabilities and capital have
credit balances. The asses are shown on the asset side of the
balance sheet and liabilities and capital are shown on the
liabilities side of the balance sheet after arranging them properly.
Classification of Assets:
Assets may be classified as follows:

Real Assets:
Assets which have some market value are called real assets, e.g.
building, machinery, stock, debtors, cash, goodwill, etc. Real
assets are further divided into two types according to their
permanence:
Fixed Assets: Assets which have long life and which are bought
for use for a long period of time are called "fixed assets". These
are not bought for selling purposes, e.g. land, building, plant,
machinery, furniture etc. Fixed assets are again sub-divided into
two:

1. Tangible Assets: Assets which have physical existence and

which can be seen, touched and felt are called "tangible

assets", e.g. building, plant, machinery, furniture etc.
2. Intangible

Assets: Assets which have no physical

existence and which cannot be seen, touched or felt are
called "intangible assets", e.g. goodwill, patent right, trade
mark etc.