What is a balance sheet and how many types are there?
Balance sheet definition:
The balance sheet is one of the most important financial statements that shows the position of assets, liabilities and equity of a business entity on a specific date. In other words, since the balance sheet shows the financial position of the company at a given time, it can also be introduced as a picture of the position of the business unit.
Types of balance sheet:
The balance sheet can be presented in two forms:
A- Account form:
As you know, the form of arithmetic corresponds to the letter T in English. In this method, the headings of assets are displayed on the right side of the balance sheet and liabilities and equity on the left side of the balance sheet. equal to the sum of the items on the left side of the balance sheet. This type of balance sheet presentation emphasizes the accounting equation. In financial statements prepared in Iran, the accounting form is mostly used to present the balance sheet.
b) Report format:
In this method, the left side of the balance sheet, the liabilities and shareholders’ equity, is listed under the assets headings.
Balance sheet items:
Each balance sheet, regardless of its reporting or accounting form, must include the following information:
1- Title:
The title of the balance sheet consists of three separate lines as follows:
• The full name of the economic unit: which is written in the first line of the title.
• Name of the report or financial statement: The name of this report is the balance sheet and is mentioned in the second line of the title.
•Report Date : In the third line of the title, the date of the last day this report is displayed is mentioned. This should refer to a specific date and not to a specific time period. For example, this section should be written as one of the following dates:
On 29/12/1393 or on 29/12/1393
2- Unit of measurement:
The unit of measurement used to record financial events should be shown in the prepared balance sheet. This unit is currently the rial in Iran and in other countries according to the currency of that country, the unit of measurement is different.
3- Accounts section:
This section of the balance sheet shows the remaining balance of each of the accounts related to the group of assets, liabilities and equity.
If the balance sheet is in the form of an account, the assets are shown on the right, the liabilities on the left, and the equity on the left. The report is prepared first, the assets are shown, then the liabilities account is shown under the assets, and finally the shareholders’ rights are shown.
Note: In the assets section, current assets are listed first and then long-term assets, and in the liabilities section, current liabilities are listed first and then long-term liabilities.
(For information on current and long-term concepts, see the article Classification of Assets and Liabilities and Their Definitions).
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4- Total accounts:
After entering the information in the balance sheet, the final sum of each column should be written. The following should be observed when writing the final sum:
In a balance sheet in the form of an account, the sum of the two sides of the balance sheet must always be equal.
In the form of a report, the sum of liabilities and equity should be equal to the sum of assets.
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3- Two parallel lines are drawn under the final sum
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