A balance sheet or statement of financial position provides a snapshot of the sources of funds and investments of an entity, as at a particular date. The elements of a balance sheet are assets, liabilities and equity and these elements form the fundamental accounting equation: Assets = Liabilities + Equity. The assets and liabilities may be presented on the balance sheet in current/non-current format or in the order of liquidity.
Key learning objectives:
What are the different categories of items on the balance sheet?
Explain the current and non-current classification of assets and liabilities on the balance sheet.
When are the assets and liabilities presented in the order of liquidity?