Balance Sheet

A balance sheet is divided into two halves, with either:

  1. the capital and liabilities in one half and assets in the other; or
  2. capital in one half and net assets in the other.

 The balance sheet may be presented horizontally or vertically.  In either case, both halves must add up to the same total.

However, a balance sheet is not so named because it balances (although, obviously it should), but because it is a statement of the outstanding balances on the ledger accounts for the capital, assets and liabilities.

The Companies Act 1985 prescribes the format that limited companies have to follow.  Small limited companies are able to file an abbreviated balance sheet at Companies House.


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