Contains of Balance Sheet :-

The Balance sheet contains two parts i.e.

1. Left hand side i.e. the Liabilities

2. Right hand side i.e. the Assets

ASSETS:

Assets represent everything which a business owns and has money value. Assets are always shown as debit balance in the ledger. Assets are classified as follows.

1. Tangible Assets:

Assets which can be seen and felt by touch are called Tangible Assets. Tangible Assets are classified into two:

a. Fixed Assets: Assets which are durable in nature and used in business over and again are known as Fixed Assets. e.g. land and Building, Machinery, Trucks, etc.

b. Floating Assets or Current Assets: Current Assets are i. Meant to be converted into cash, ii. Meant for resale, iii. Likely to undergo change e.g. Cash, Balance, stock, Sundry Debtors.

2. Intangible Assets: Assets which cannot be seen and has no fixed shape. E.g., goodwill, Patent.

3. Fictitious assets: Assets which have no real value and will appear on the Assets side of B/S. are known as Fictitious assets: E.g. Preliminary expenses, Discount or creditors.

LIABILITIES:

All that the business owes to others are called Liabilities. It also includes Proprietor’s Capital. They are known as credit balances in ledger.

Classification of Liabilities:

1. Long Term Liabilities: Liabilities will be redeemed after a long period of time 10 to 15 years E.g. Capital, Long Term Loans.

2. Current Liabilities: Liabilities, which are redeemed within a year, are called Current Liabilities or short-term liabilities E.g. Trade creditors, B/P, Bank Loan.

3. Contingent Liabilities: Liabilities, which have the following features, are called contingent liabilities. They are:

a. Not actual liability at present

b. Might become a liability in future on condition that the contemplated event occurs. E.g. Liability in respect of pending suit