A balance sheet summarizes a company's assets, liabilities, and shareholders' equity at a point in time. Assets are listed in order of liquidity and include current assets that can be converted to cash within a year and non-current assets that cannot. Liabilities include money owed to outside parties within one year for current liabilities and after one year for long-term liabilities. Shareholders' equity represents the money attributable to owners in the form of net assets. A balance sheet provides a snapshot of finances and should be compared over time and against industry peers. Personal and small business balance sheets similarly list assets, liabilities, and equity but are simpler forms.

1. Balance Sheet
Subject : Accounting For
Managers
Submitted By: Nitish Sadotra

2. What is a ‘Balance Sheet’
A balance sheet is a financial statement that summarizes a company's assets,
liabilities and shareholders' equity at a specific point in time. These three
balance sheet segments give investors an idea as to what the company owns
and owes, as well as the amount invested by shareholders.

3. Assets
Within the assets segment, accounts are listed from top to bottom in
order of their liquidity, that is, the ease with which they can be
converted into cash. They are divided into current assets, those which
can be converted to cash in one year or less; and non-current or long-
term assets, which cannot.

4. Liabilities
• Liabilities are the money that a company owes to outside
parties, from bills it has to pay to suppliers to interest on
bonds it has issued to creditors to rent, utilities and salaries.
Current liabilities are those that are due within one year and
are listed in order of their due date. Long-term liabilities are
due at any point after one year.

5. Shareholders' equity
Shareholders' equity is the money attributable to a business' owners,
meaning its shareholders. It is also known as "net assets," since it is
equivalent to the total assets of a company minus its liabilities, that is,
the debt it owes to non-shareholders.
The net assets shown by the balance sheet equals the third part of the
balance sheet, which is known as the shareholders' equity.

6. How To Interpret a Balance Sheet
The balance sheet is a snapshot, representing the state of a company's
finances at a moment in time.
By itself, it cannot give a sense of the trends that are playing out over
a longer period.
For this reason, the balance sheet should be compared with those of
previous periods. It should also be compared with those of other
businesses in the same industry, since different industries have
unique approaches to financing.

7. Types of Balance Sheet
• A balance sheet summarizes an organization or individual's
assets, equity and liabilities at a specific point in time.
• Two forms of balance sheet exist. They are the report form
and the account form. Individuals and small businesses
tend to have simple balance sheets.
• Personal balance sheet.
• Small business balance sheet.

8. Personal Balance Sheet
A personal balance sheet lists current assets such as cash in checking accounts
and savings accounts, current liabilities such as loan debt and mortgage debt
due, or overdue, long-term liabilities such as mortgage and other loan debt.
Securities and real estate values are listed at market value rather than at
historical cost or cost basis. Personal net worth is the difference between an
individual's total assets and total liabilities.

9. Small Business Balance Sheet
A small business balance sheet lists current assets such as cash, accounts receivable, and
inventory, fixed assets such as land, buildings, and equipment, intangible assets such as
patents, and liabilities such as accounts payable, accrued expenses, and long-term debt.
Contingent liabilities such as warranties are noted in the footnotes to the balance sheet. The
small business's equity is the difference between total assets and total liabilities.