The balance sheet

The balance sheet is a snapshot of the assets and liabilities of the business as at a date. It is normally the accounting year end date.

The balance sheet is more than just listing the assets and liabilities of the business; it arranges them into a suitable order so that the financial position of the business can be clearly seen. Take for example, net current assets; it is the difference between total current assets and total current liabilities. It also sometimes referred to as working capital. It shows the amounts of money available to the business for its day to day business activities.

Similarly to the profit and loss account, the balance sheet is usually presented in a vertical column and only shows the round pound figures with the comparative figures for the previous year are shown alongside the figure for the current year. The layout for the balance sheet may vary slightly according to the type of business.

It is important to note that for limited company accounts, the format and disclosure must comply with the Companies Act and relevant accounting standards. For sole traders and partnerships there is no legal prescribed format on their accounts.

Concise Accountancy – Helping businesses to understand their accounting records.