balance sheet

Definition:

a financial statement for an accounting entity which shows its financial position on a particular day (called the ‘balance sheet date’) by stating the values of its assets and liabilities on that day and, where appropriate, the owners’ equity on that day. A balance sheet is a classified summary of the balances on the ledger accounts of the accounting entity after nominal accounts have been closed off. A balance sheet is drawn up in a conventional form. Until recently, the ‘account form’ was usual, which was in two columns with assets listed in one column and liabilities and owners’ equity in the other column: by virtue of the accounting equation, the total of the two columns would be equal. Nowadays, the ‘vertical form’ or ‘narrative form’ is more usual.



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