Balance sheet: Difference between revisions
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One of the primary statements of a reporting entity's financial accounts. | One of the primary statements of a reporting entity's financial accounts. | ||
The balance sheet lists the assets, liabilities and shareholders’ funds at the balance sheet date. | The balance sheet lists the assets, liabilities and shareholders’ funds at the balance sheet date. | ||
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For example in summary: | For example in summary: | ||
TOP HALF: | TOP HALF: | ||
Assets 100 DR | Assets 100 DR | ||
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BOTTOM HALF: | BOTTOM HALF: | ||
Shareholders’ funds 80 CR | Shareholders’ funds 80 CR | ||
(Total shareholders' funds being appropriately detailed in turn into share capital and reserves, as well as the individual assets and liabilities being appropriately listed in fuller detail.) | (Total shareholders' funds being appropriately detailed in turn into share capital and reserves, as well as the individual assets and liabilities being appropriately listed in fuller detail.) | ||
The balance sheet equation in summary using the convention above is 80 = 80. | The balance sheet equation in summary using the convention above is 80 = 80. | ||
2. | 2. | ||
There are many other ways to present this information in other balance sheet formats. | There are many other ways to present this information in other balance sheet formats. | ||
Alternative balance sheet conventions maintain the balanced/double-entry principle, but may show for example: | Alternative balance sheet conventions maintain the balanced/double-entry principle, but may show for example: | ||
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Presented on this alternative (assets = liabilities) basis, using the same summary figures: | Presented on this alternative (assets = liabilities) basis, using the same summary figures: | ||
TOP HALF: | TOP HALF: | ||
Total assets 100 DR | Total assets 100 DR | ||
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+ Shareholders’ funds 80 CR | + Shareholders’ funds 80 CR | ||
= Total liabilities & shareholders’ funds 100 CR | = Total liabilities & shareholders’ funds 100 CR | ||
The same balance sheet information has now been presented as 100 = 100, using the alternative convention. | The same balance sheet information has now been presented as 100 = 100, using the alternative convention. | ||
The Total liabilities of 20 CR are now presented in the bottom half of the balance sheet (rather than in the top half as before). | The Total liabilities of 20 CR are now presented in the bottom half of the balance sheet (rather than in the top half as before). | ||
The choice of presentation will depend on the purposes for which the balance sheet information is required, together with any rules or conventions applying to the entity's external reporting. | The choice of presentation will depend on the purposes for which the balance sheet information is required, together with any rules or conventions applying to the entity's external reporting. | ||
== See also == | == See also == | ||
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* [[Short term]] | * [[Short term]] | ||
* [[Statement of financial position]] | * [[Statement of financial position]] | ||
==Other links== | |||
[http://www.treasurers.org/node/5176 Is your balance sheet sound?, The Treasurer, 2009] | |||
Revision as of 09:44, 2 October 2013
(BS).
1.
One of the primary statements of a reporting entity's financial accounts.
The balance sheet lists the assets, liabilities and shareholders’ funds at the balance sheet date.
Under the 'double entry' accounting convention, assets are Debits (DR) and liabilities and shareholders' funds are Credits (CR).
The standard UK balance sheet presentation for external reporting is Net Assets = Shareholders' Funds.
The Net assets part of the balance sheet is sometimes called the 'top half'. The Shareholders' funds part being the 'bottom half'.
For example in summary:
TOP HALF: Assets 100 DR - Liabilities (20) CR = Net assets 80 DR
BOTTOM HALF: Shareholders’ funds 80 CR
(Total shareholders' funds being appropriately detailed in turn into share capital and reserves, as well as the individual assets and liabilities being appropriately listed in fuller detail.)
The balance sheet equation in summary using the convention above is 80 = 80.
2.
There are many other ways to present this information in other balance sheet formats. Alternative balance sheet conventions maintain the balanced/double-entry principle, but may show for example:
Total Assets = Total Liabilities + Shareholders' Funds.
Presented on this alternative (assets = liabilities) basis, using the same summary figures:
TOP HALF: Total assets 100 DR
BOTTOM HALF: Total liabilities 20 CR + Shareholders’ funds 80 CR = Total liabilities & shareholders’ funds 100 CR
The same balance sheet information has now been presented as 100 = 100, using the alternative convention. The Total liabilities of 20 CR are now presented in the bottom half of the balance sheet (rather than in the top half as before).
The choice of presentation will depend on the purposes for which the balance sheet information is required, together with any rules or conventions applying to the entity's external reporting.
See also
- Assets
- Balance sheet exposure
- Cashflow statement
- Credit balance
- Current/non-current method
- Debit balance
- Double entry
- Event after the balance sheet date
- Financial statements
- Income statement
- Liabilities
- Off balance sheet
- Off-balance sheet finance
- Post balance sheet event
- Profit and Loss account
- Share capital
- Shareholders’ funds
- Short term
- Statement of financial position
