A Balance Sheet
A Balance sheet is a statement that presents the summary of assets and liabilities in a well composed form to ascertain the financial position of a business for a particular financial period. It is headed this way,for example"The balance sheet as at 31st December 1999"
Functions of a Balance Sheet
To ascertain financial position of a business.
To know the assets of a business.
To know the liabilities of a business.
Now let's find out the meaning of the major keywords; Assets and Liabilities
ASSETS
They are simply the properties of a business. They include everything own by the business.
Types of Assets
1.)Fixed Assets: They are assets of the business which are usually permanent or long lasting in nature. They have depreciable values. For example; land,building,furniture and fittings,machines, etc.
2.)Current Assets: These are properties of the business which are on short term basis,that is, they are not permanent in natfeltThey may not last to the end of a financial period. They include; stock( of raw materials or goods),cash(at hand or bank),prepayments, accrued income,bills receivable, etc.
3.)Intangible Assets: They are simply assets that cannot be seen or touched.They are usually in form of documents and are valuable. Examples are:Goodwill, patent,trademark and copyright.
LIABILITIES
They include all things owed by the business to the outside world.We have two types of liabilities, they are:
1)Long- term liabilities: From its name,we know that it is for a long period of time,usually more than a year.Example; debenture.
2)Current Liabilities: They are liabilities for a short period.They include bills payable,creditors, income prepaid, accrued expenses, bank loan and overdraft etc.
