Balance Sheet (overview)
A balance sheet is a statement of the total
of an organisation
at a particular
- usually the last date of an accounting period.
The balance sheet is split into two parts:
(1) A statement of
(sometimes referred to as "
(2) A statement showing how the Net Assets have been financed, for example through share
capital and retained profits.
The Companies Act requires the balance sheet to be included in the published financial accounts
of all limited companies. In reality, all other organisations that need to prepare accounting
information for external users (e.g. charities, clubs, partnerships) will also product a balance
sheet since it is an important statement of the financial affairs of the organisation.
A balance sheet does not necessary "value" a company, since assets and liabilities are shown
and some intangible assets (e.g. brands, quality of management, market
leadership) are not included.
Example Balance Sheet
The structure of a typical balance sheet is illustrated below:
Balance Sheet at 31 December
Goodwill and other intangible assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Current tax liabilities
Net current assets