2. A Balance Sheet is a detailed
expression of the accounting
equation for a business at a certain
point in time. It is a major report
that lists the various asset, liability
and owner’s equity items.
3. • usually presented in the form of
the accounting equation A – L =
OE
• prepared after Income Statement
– net profit/loss is included in the
Owner’s Equity section
4. • assets are listed in order of
liquidity – those assets most
easily converted into cash are
listed first
• liabilities are listed in the order
they would be repaid – those
repaid quickest are listed first
down to those taking longer to
repay last
5. • all accounts provided in the sheet
are listed with their final balances
except for the capital a/c
• the capital a/c lists the balance at
the beginning of the period and
indicates net profit and drawings
for the period resulting in the
closing capital balance
