Balance Sheet (Byte Size)



Balance Sheet (Byte Size)

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You are probably familiar with the accounting term 'balance sheet'. However, relatively few of you will probably really understand what a balance sheet really is or what it purports to show. In this course we shall see that the balance sheet aims to provide a statement of financial position by setting out the resources of the business, on the one hand, and the claims against those resources, on the other. The information contained within the balance sheet can be presented in various forms and in this course we shall consider the main forms of presentation. In drawing up a balance sheet, we employ a number of accounting rules or conventions. We consider these in some detail and discuss their limitations.

By the end of this course, you should be able to:

  • explain the nature and purpose of a balance sheet
  • define the terms asset, liability and capital
  • explain the typical form and content of a balance sheet
  • discuss the major conventions that underpin the balance sheet
  • explain why a balance sheet on its own does not provide an adequate record of events