What is Balance Sheet

&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad1" id&equals;"quads-ad1" style&equals;"float&colon;left&semi;margin&colon;0px 0px 0px 0&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;<p align&equals;"justify">Every business entity prepares a balance sheet at the end of each year&comma; and most of the companies prepare at the end of the month&period; The purpose of balance sheet is to give a clear picture of financial position of a business or entity&period; Balance sheet consists of the assets&comma; liabilities and owner&&num;8217&semi;s equity of a business or entity&period; Data of the balance sheet is most important because the financial position of the business changes quickly&period; Usefulness of the balance sheet increases if it is relatively recent&period; Example of the balance sheet is as follows&colon; <&sol;p>&NewLine;<p align&equals;"justify">&&num;160&semi;<&sol;p>&NewLine;<p align&equals;"justify"><a href&equals;"http&colon;&sol;&sol;mba-lectures&period;com&sol;wp-content&sol;uploads&sol;2010&sol;10&sol;image1&period;png"><img style&equals;"border-right-width&colon; 0px&semi; display&colon; inline&semi; border-top-width&colon; 0px&semi; border-bottom-width&colon; 0px&semi; border-left-width&colon; 0px" title&equals;"image" border&equals;"0" alt&equals;"image" src&equals;"http&colon;&sol;&sol;mba-lectures&period;com&sol;wp-content&sol;uploads&sol;2010&sol;10&sol;image&lowbar;thumb1&period;png" width&equals;"500" height&equals;"179" &sol;><&sol;a> <&sol;p>&NewLine;<p align&equals;"justify">&&num;160&semi;<&sol;p>&NewLine;<p align&equals;"justify">Let&&num;8217&semi;s illustrate the features of this balance sheet&period; First&comma; heading sets three things &lpar;i&rpar; the name of business entity &lpar;ii&rpar; name of the financial statement &lpar;iii&rpar; date of the balance sheet&period; The body is also the combination of three things such as&colon; assets&comma; liabilities and owner&&num;8217&semi;s equity&period; <&sol;p>&NewLine;<p align&equals;"justify">Note that items will be listed according to nature&semi; the more liquid asset will list first followed by other more liquid asset such as&colon; cash&comma; notes receivable&comma; accounts receivable&comma; etc that will be soon consumed in business operations or converted into cash&period; Permanent assets or fixed assets are land&comma; equipment&comma; and building&period; Liabilities must be shown before owner&&num;8217&semi;s equity and with same pattern followed in assets &lpar;notes payable&comma; accounts payable and salaries payable etc&period;&rpar; followed by a heading and figure total liabilities&period; <&sol;p>&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad2" id&equals;"quads-ad2" style&equals;"float&colon;none&semi;margin&colon;0px 0 0px 0&semi;text-align&colon;center&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;<p align&equals;"justify">This financial statement is also known as a balance sheet so the both sides must be equal&period; That is&comma; the total assets &equals; 600000 and liability &plus; owner&&num;8217&semi;s equity &equals; 600000&comma; Remember this relationship always exists&period; &NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad3" id&equals;"quads-ad3" style&equals;"float&colon;none&semi;margin&colon;0px&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;