Balance Sheet

In accounts and finance world the most important final account considered is the Balance Sheet.
It is basically a document which depicts the financial position of the company. The document is generated generally on the last day of the financial year.

There are two parts of balance sheet; Assets and Liabilities.
The Assets contain all the components which are owned or belong to the organization.
The Liabilities are the payables or components which the company is liable to repay.

The balance sheet gives a correct depiction of what is the current state of the organization. This document is used as a base to evaluate many financial analysis and a platform for many analytics.

The assets include three major parts

-Fixed Assets
-Investments
-Current Assets

The liabilities include three major parts

-Equity
-Debt
-Current liabilities & provisions.


Different accounting standards have defined different formats in which the balance sheet and its components should be represented. However, looking at a larger picture of the balance sheet, these are the pre-dominant components which formulate the balance sheet.

The assets components should be able to equate the liability, which the payment liability for the company. Hence it is called a 'Balance' sheet, wherein the components are balanced.

More clarity will be seen in the coming posts where I would demonstrate a balance sheet with help of a balance sheet example.