| 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 |
|
|