Balance Sheet

This is a financial statement which shows the financial position of an enterprise as of a particular or
specific date. This measures and evaluate in terms of the enterprise ' liquidity, solvency, financial structure and capacity for adaption. Liquidity is the ability of the enterprise to meet currently maturing for obligations. Solvency is the availability of cash over the longer term to meet maturing obligations. Financial Structure is the source of financing for the assets of the enterprise. It indicates how much is borrowed capital and how much is equity capital.Capacity for Adaptation is the financial flexibility of the enterprise to use its available cash for unexpected requirements and investment opportunities.

A balance Sheet shows the assets, Liabilities and Owner's Equity. This answers the following questions:
a.) How much is the business owns? (Referring to the assets)
b.)How much the business ows?( Referring to the liabilities)
c.) How much is the business net worth? (Referring to the Owner's equity)
The claims of both owner and creditors over the total assets of the business are called "equities".
The period covered in the Balance Sheet is worded " As of...."
A balance sheet is of two (2) forms, namely:
1.)Account form- this is form of balance sheet that is patterned after the Accounting Equation A=L+OE wherein the assets are shown at the left side while Liabilities and Owner's Equity at he right side. This is referred to as the " Balance Sheet in a horizontal order" and is used when there are plenty of accounts involved.
2.)Report form- in this form of a balance sheet, the assets are shown first and followed by Liabilities and Owner's Equity in a "vertical Order" and is used when there are a few accounts involved.

Philippine Accounting Standards (PAS) No.1 does not prescribe the format of the balance Sheet. Assets can be presented showing current liabilities can be presented before non-current liabilities or vice-versa and then the equity.