What is a Balance Sheet? State its main features.

Meaning — A Balance Sheet is a statement which shows the assets and liabilities of an organisation along with its Capital Fund on a particular date. It depicts the financial position of the organisation on a specified date and is prepared after the Income and Expenditure Account.

Main Features of a Balance Sheet:

1. Prepared on a particular date — A Balance Sheet is always prepared on a specific date.

2. It is a statement, not an account — A Balance Sheet is a statement of assets and liabilities and is not part of the double entry posting system.

3. Shows financial position — It depicts the financial position of the organisation by listing assets owned and liabilities owed.

4. Prepared after Income and Expenditure Account — In a non-trading organisation, the Balance Sheet is prepared after the Income and Expenditure Account.

5. Two sides — Assets are shown on the right hand side and liabilities on the left hand side. Both sides of the Balance Sheet must be equal in total (assets = liabilities + Capital Fund).

6. Includes Capital Fund — The Balance Sheet of a non-trading organisation specifically depicts the Capital Fund of the organisation.

7. Statutory requirement — Preparation of a Balance Sheet is a statutory requirement for non-trading organisations as well as companies.