DEFINITION OF BALANCE SHEET
Balance sheet can be defined as a statement showing the assets and liabilities of a business as at a given date. A balance sheet is not an account and so it does not have debit or credit side. Also it does not have balance brought down or balance carried down.
CLASSIFICATION OF ASSETS AND LIABILITIES
Assets: These are the valuable resources of a business. Among these resources we have the ones that are more permanent in nature and others less permanent. The more permanent assets e.g. land and buildings, office equipment plant and machinery furniture and fittings, motor vehicles, etc are referred to as fixed assets. The less permanent ones are referred to as current assets. Examples of current assets are: stock, trade debtors, bills receivable cash at bank, cash in hand, etc.
Capital: This is worth the business owes the owner of the business. In other words, capital is the amount which is used to establish a business.
Current Liabilities: are the debts a business owes outsiders which should be repaid within one year. Examples are trade creditors, bank overdraft, accrued expenses, bills payables, etc. A format of a balance sheet is as follows:-