Simple balance sheet example

The balance sheet (also known as the statement of financial position) is a financial statement that shows the assets, liabilities, and owner’s equity of a business at a particular date.

The main purpose of preparing a balance sheet is to disclose the financial position of a business enterprise at a given date. While the balance sheet can be prepared at any time, it is mostly prepared at the end of the accounting period.

Most of the information about assets, liabilities, and owners’ equity items is obtained from the adjusted trial balance of the company.

Vertical balance sheet format

However, retained earnings, a part of the owners’ equity section, is provided by the statement of retained earnings.

Sections of the balance sheet

We can broadly divide a balance sheet into three sections: the assets section, the liabilities section, and the owners’ equity section.

Each of these sections is briefly discussed below:

Assets section

In this section all the resources (i.e., assets) of the business are listed. In the balance sheet, assets having similar characteristics are grouped together

show balance

show a balance sheet