Items appearing on a Balance Sheet


Assets of a business are what it owns. They can be classified as:

Fixed assets:  All those assets which are owned by the business and last for more than an accounting year. Examples include Land, building, machinery, vehicle, furniture and fixtures and the like.

Current assets: It includes all those assets which either in the form of cash or can be easily converted into cash within one accounting period. Current Assets include Cash, Debtors and Stock.


Liabilities represents what the business owes to outside persons other than owners. These liabilities are classified on basis of time period of repayment.

Long term liabilities: These are liabilities which the business owes for more than one accounting period, e.g. long term bank loans, debentures etc.

Current liabilities: These are short term debts of the business that are to be repaid within one accounting period, e.g. creditors and bank overdraft.

Owner’s Equity

Owner’s equity represents what the business owes its owner.

It is equal to total assets minus total liabilities.

Important points regarding Balance Sheet

  • The Balance Sheet is not an account but a statement.
  • It does not have debit or credit side but has two sections i.e. assets and liabilities.
  • The heading of Balance Sheet is ‘as on a particular date’. Thus a Balance Sheet may have different figure on different dates.
  • The balances shown in the Balance Sheet act as Opening Balances for the next accounting period.
  • Balance Sheet is based on the accounting equation

Assets= Owner’s Equity + Liabilities


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