Balance Sheet
A balance sheet shows the financial position of the accounting entity on a specific date. A balance sheet is always dated as of a certain date. For example, the balance sheet as of December 31, 1992 shows the entity's financial position as of the end of 1992. A balance sheet as of January 31 shows the financial position as of the end of January.
We shall start to prepare a balance sheet for Computer Solutions, using the following format.
Note that the balance sheet has two sides. The left-hand side is called the assets side. Amounts listed on that side show the resources owned by the entity. The right-hand side is called the equities side.
The amounts shown on the right-hand side can be explained in either of two ways; both are correct. In one view, equities are claims against the assets. In the other view, equities show the amount of funds that have been supplied to the entity from various sources. As you proceed, you may find that one of these views makes more sense to you than the other. Use that one.