Question

What are the characteristics of a Balance Sheet?

Answer 1

1. A balance sheet is not prepared for an entire period, and thus, it depicts the situation of the business on a particular date.
2. A balance sheet is prepared only after the completion of the profit and loss statement for the accounting period to tell about the financial position of the business.
3. Balance comprises two sides - Assets and Liabilities. The figure of both the sides should tally with each other in the balance sheet.
4. Balance sheets establish the value of the position of the business on a particular date by discussing the position of the assets and liabilities of the business.