Balance Sheet Format

The balance sheet shows the balances of assets, liabilities and owner’s equity on a particular day.

The balance sheet provides a snapshot of a business at an exact point in time – it shows the balances of the various accounts on the last day of the reporting period.

Balance Sheet Format

Here is a basic balance sheet format:

As you can see from the balance sheet above, the total of the assets agrees in value (balances) with the total of the owner’s equity and liabilities.

Comparing the report to original accounting equation:

One can clearly see that the balance sheet shows the accounting equation (or the financial position) of a business, except that this accounting equation is turned on its head and shown in a vertical format, with the assets on top and the equity and liabilities on the bottom.

Balance Sheet Categories:

Non-Current Versus Current

The balance sheet also divides the assets and liabilities into categories.

Assets and liabilities must be divided up into long-term and short-term categories. Non-current means long-term and current means short-term.

The dividing line between current and non-current is one year from the date that the balance sheet is issued.

In other words, an asset will be classified as current if it is expected to be sold (or used) within a year from the date of the report.

An asset will be classified as non-current if it is expected to be used for more than one year.

A liability that is expected to be paid off within a year, such as a creditor, is classified as current.

A loan, which is expected to be paid off more than a year from the balance sheet date, is classified as a non-current liability.

The division of assets and liabilities into these categories is done to provide more meaningful information to the readers of this report.