What is a Balance Sheet? Definition, Format and Example of Balance Sheet


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Balance Sheet Definition:

In financial accounting, “Balance sheet is a financial statement summary report of an assets, liabilities and equity capital of an individual or a company or an organization at a specific given time”. This provides adequate information to investors, shareholders or a group about the company’s financial strength at given point of time. This financial report is also known as statement of financial position.

When all the transactions are recorded at the end of accounting year, it reflects the company’s financial position for that accounting year. Investors, readers, or other parties can get information about companies by looking at its balance sheet. This statement presents accurate information about what does company owns and how much company owes to other parties. This data is valuable to bankers as well for processing any credits and loans for the company.


Balance sheet is the mirror image of the below given formula:
Total Assets = Total Liabilities + Owner’s (capital) Equity

Wiki Finance pedia - e-learning course on Accounting Wikipedia Chapter - Learn about Balance Sheet StatementAn item to be included in Balance Sheet are:

  • Current Assets like Cash and cash equivalents, Investments, Assets, Machinery, Land, Inventories, Buildings, Trade and other receivables, etc.
  • Non-Current Assets like Intangible assets, Patents, Goodwill, Copyrights, etc.
  • Current Liabilities likes Current tax liabilities, Accrued expenses, Current portion of loans payable, Trade and other payables, other financial liabilities, etc.
  • Non-Current Liabilities like deferred tax liabilities, Loans payable, other non-current liabilities.
  • Equity like Capital stock, Retained earnings, Additional paid-in capital.

Balance Sheet Template / Balance Sheet Example:

Balance Sheet of Xyz Corporation India Pvt. Ltd.(Amount in thousands)
 Format of Balance Sheet:

As of Last Year Ending
(-Rs-)

As of Current Year Ending
(-Rs-)

ASSETS
Current Assets
Cash and cash equivalents1,40,0001,80,000
Inventories70,00093,000
Trade receivables75,00097,000
Other current assets13,00080,000
Total current assets2,98,0004,50,000
 
Non-current assets
Goodwill45,00075,000
Property, plant, and equipment2,80,0003,50,000
Other intangible assets77,0001,05,000
Total non-current assets4,02,0005,30,000
Total assets7,00,0009,80,000
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables1,10,0001,35,000
Current tax payable26,00049,000
Current portion of long-term borrowings12,00041,000
Short-term borrowings55,0001,25,000
Accrued expenses10,00038,000
Total current liabilities2,13,0003,88,000
Non-current liabilities
Deferred taxes45,00070,000
Long-term debt34,00056,000
Total non-current liabilities79,0001,26,000
Total liabilities2,92,0005,14,000
Shareholders’ Equity
Capital1,55,0001,85,000
Additional paid-in capital20,00064,000
Retained earnings2,33,0002,17,000
Total equity4,08,0004,66,000
Total  liabilities and equity7,00,0009,80,000

- Tutorial Course - Basics of Accounting for Beginners -

» e-Learning Chapter 1: What is Accounting and objectives of Accounting?

» e-Learning Chapter 2: What is Assets and Current Assets?

» e-Learning Chapter 3: What is Liability and Current Liabilities?

» e-Learning Chapter 4: What is Revenue and Expenses?

» e-Learning Chapter 5: What are the Types of Accounts?

» e-Learning Chapter 6: What is a Single Entry System?

» e-Learning Chapter 7: What is Double Entry Accounting System?

» e-Learning Chapter 8: What are the steps involved in Accounting Process Cycle.

» e-Learning Chapter 9: What are Journal Entries? Format and Examples.

» e-Learning Chapter 10: What Is a General Ledger? Format with Example.

» e-Learning Chapter 11: What is a Trial Balance? Examples and Limitations.

» e-Learning Chapter 12: What is a profit and loss statement or Income Statement?

» Currently Reading: What is a Balance Sheet? Definition, Format and Examples.

» e-Learning Chapter 14: What are the Different Types of Accounting Methods in Bookkeeping.

» e-Learning Chapter 15: Accounting Quiz – Basics of Accounting for Beginners Module.


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