Balance Sheet

After ascertaining the profit or loss of the business, the organisation turns to the financial position of the business. The Balance Sheet is prepared listing the Assets and Liabilities at the closing date of the accounting period. The total of the Assets and Liabilities should be equal; otherwise, there is some error needing rectification. 

Balance Sheet is a classified summary of the balance remaining open in the Ledger after all the income and expenditure accounts have been closed off by transfer to P & L A/c. It discloses the amount of capital contributed and how the same has been invests - the values of assets and liabilities and their nature. The left hand side, by convention, lists the capital and liabilities of the business. Assets and other debit balances are shown on the right hand side. [The persistent and uncorrected irony can be seen : Left side is readable first and the right side later; however, the nomenclature is : Assets and Liabilities Statement - reversing the order, right first and left next. Interchange of position is equally in vogue.]

According to Freeman, "Balance Sheet is an demised list of the assets, liabilities and proprietorship of a business or an individual at a certain date."