Companies must prepare a number of financial statements to comply with accounting regulations. One such statement is a Balance Sheet statement.
This report shows the financial position of a business as of the report date therefore it covers a specific point in time. The information is gathered into the general classifications of assets, liabilities, and equity. Line items within the asset and liability classification are presented in their order of liquidity, so that the most liquid items are stated first. This is a key document, and so is included in most issuances of the financial statements.
Most accounting balance sheets classify a company’s assets and liabilities into distinctive groupings such as Current Assets; Property, Plant, and Equipment; Current Liabilities; etc. These classifications make the balance sheet more useful. Balance sheet segments can also give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders.
The balance sheet informs company owners about the net worth of the company. This is done by subtracting the total liabilities from the total assets to calculate the owner’s equity, also known as shareholder’s equity (for corporations) or simply the net worth.
Gaining insight into the financial strength of a company and seeing how the company resources are distributed and comparing the information with similar companies. The following balance sheet example is a classified balance sheet. Download it for free at https://www.vertex42.com/ExcelTemplates/balance-sheet.html