Question

What is a balance sheet? What are its characteristics?

Answer 1

After determination of financial results by preparation of trading and profit and loss account, a balance sheet is prepared to record capital, liabilities and assets of the business. Balance sheet is a statement containing ledger balances of real and personal accounts. Unlike trading and profit and loss account, it is not an account.

Characteristics of Balance Sheet:
(i) It is always prepared on a particular date.
(ii) The total of both the sides must be equal.
(iii) It shows the financial position of the business.
(iv) It is a statement, not an account.
(v) It has no debit and credit side.