Balance Sheet Example,What is The Horizontal and What is the Vertical Presentation Method Of Preparing A Balance Sheet

November 6th, 2009 Comments off
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Earlier article we have describe what is a balance sheet re:a Balance Sheet is called the Statement of Financial Position which is a snapshot of a company’s financial position at a particular point in time. The Accounting equation which is Assets= Liabilities+ Stockholder’s Equity is closely link to the Balance Sheet. Because of this accounting equation and the double entry system, the Balance sheet will always agree or tally.This article descibes the two ways/formats of preparing the balance sheet.

Balance sheet example using the horizontal presentation method:

Horizontal Presentation

Note that the horizontal presentation uses a format that present assets on the left and liabilities and equity on the right

ABC Company

Balance Sheet As at July 31st 2008

Assets Liabilities & Stockholders’ Equity
$ $
Current Assets Current Liabilities
Cash 10,000 Accounts payable 15,000
Accounts Receivable 20,000 Salaries Payable 9,000
Inventories 30,000 Total Current Liabilities 24,000
Deposits, prepayments 5,000 Bonds payable 20,000
Total Current Assets 65,000 Mortgages 35,000
Total Liabilities 79,000
Stockholders’ equity
Property, plant and equipment, net 55,000 Common stock 50,000
Intangible assets 10,000 Retained earnings 1,000
Total Assets 130,000 Total Liabilities and Stockholders’ equity 130,000

Balance sheet example using the Vertical presentation method:

The vertical presentation show the assets followed by liabilities and equity directly below the assets.

ABC Company

Balance Sheet As At 31st July 2008

Assets
Current Assets
Cash 10,000
Accounts Receivable 20,000
Inventories 30,000
Deposits, prepayments 5,000
Total Current Assets 65,000
Non Current Assets
Property, plant and equipment, net 55,000
Intangible assets 10,000
Total Non Current Assets 65,000
Total Assets 130,000
Liabilities & Stockholders’ Equity
$
Current Liabilities
Accounts payable 15,000
Salaries Payable 9,000
Total Current Liabilities 24,000
Non Current Liabilities
Long Term Bonds payable 20,000
Mortgages 35,000
Total Non Current Liabilities 55,000
Total Liabilities 79,000
Stockholders’ equity
Common stock 50,000
Retained earnings 1,000
Total Liabilities and Stockholders’ equity

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Financial Accounting

 
 

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