When we study the accounting equation, we alway see that the equation always balance.Based on this fundamental rule of dual aspect or double entry system or procedure, the statement prepared will alway balance hence the word called “Balance ” Sheet.
This Part 1 of this article looks at the asset side of the Balance Sheet.
Let’s look at the following basics of the Balance Sheet and the meaning of assets:
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A BALANCE SHEET IS A: |
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SNAPSHOT of the financial position of an entity. This snapshot is at a point of time. Say, as at 7 May 2006, you look at Company A’s balance sheet, it reflects the financial position as at that day. After that day, the financial position company A can change to a better or worse situation. Also, remember that in the Balance Sheet, we have the three (3) key components: ASSETS= Liabilities + Owner’s Equity ( Refer to my illustration for the Dual Aspect Concept)
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DEFINE WHAT ARE THE CHARACTERISTIC OF ASSETS? |
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resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity
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WHAT ARE THE MAJOR COMPONENTS OF THE TOTAL ASSETS? |
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Comprises: |
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1. Current Assets |
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2. Property, plant and equipment |
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3. Investments |
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4. Intangible Assets |
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