Balance Sheet a.k.a.

Statement of Financial Position

A balance sheet shows the financial position or condition of a company as of a certain date. It is also
called Statement of Financial Position.
Financial position pertains to the resources owned and controlled by the company(assets), and the claims
against them (liabilities and capital).
Hence, if you have a report that presents a company's assets, liabilities and capital, then you are probably
looking at a company's balance sheet.
This lesson shows what a Balance Sheet looks like and provides some points you need to know about
this financial report.

Balance Sheet Example

Moving on from our previous illustrations, here is a sample balance sheet for Strauss Printing Services,
a service type sole proprietorship business. All amounts are assumed and simplified for illustration
purposes.

Strauss Printing Services

Statement of Financial Position
As of December 31, 2014
ASSETS
Current Assets:
Cash
$ 21,000
Accounts Receivable
16,000
Prepaid Expenses
4,500 $ 41,500
Non-current Assets:
Property, Plant and Equipment
145,000
Total Assets
$ 186,500
LIABILITIES AND OWNER'S EQUITY
Current Liabilities:
Accounts Payable
$ 8,400
Rent Payable
8,000 $ 16,400
Non-current Liability:
Loans Payable
23,000
Strauss, Capital
147,100
Total Liabilities and Owner's Equity
$ 186,500

Explanation and Pointers

1. A Balance Sheet shows the financial position or condition of the company; thus, it is also called
"Statement of Financial Position".
2. A typical balance sheet starts with a heading which consists of three lines. The first line presents the
name of the company; the second describes the title of the report; and the third states the date of the
report.
3. Notice that the third line is worded "As of..." Unlike the other components of the financial statements
which cover a span of time ("For the period ended.."), the balance sheet presents information as of a
certain date (at a specific point in time). In the above example, the contents of the balance sheet pertain
to the financial condition of the company on December 31, 2014.
4. A balance sheet summarizes the assets, liabilities, and capital of a company. Assets refer to properties
owned and controlled by the company. Liabilities are obligations to creditors, lenders, etc. And capital
represents the portion left for the owners of the business after all liabilities are paid. For detailed lessons
about assets, liabilities and capital, check out the Elements of Accounting.
5. Assets and liabilities are classified as either current or non-current. Current assets are properties that
will be converted into cash within 12 months or within the operating cycle of the business. Current
liabilities are due within 12 months or within the operating cycle. Non-current assets and non-current
liabilities are those that do not meet the above qualifications.
6. "Total assets" and "total liabilities and capital" should always be equal.
7. The capital amount, $147,100 for Strauss, Capital, was actually taken from the Statement of Owner's
Equity.
8. The balance sheet may be presented in two forms: account form and report form. In account form,
assets are presented on the left side while liabilities and capital are presented on the right. In report
form, assets are presented first and then followed by liabilities and capital. The example above is
presented using the report form.
9. Good accounting form suggests that a single line is drawn every time an amount is computed. It signifies
that a mathematical operation has been completed. The "total assets" and "total liabilities and capital"
amounts are double-ruled.