Balance Sheet Format
A financial statement issued by a company with the primary objective of the said document is to inform the reader of the paper about the number of assets, liabilities and shareholders’ equity is called a balance sheet. We have discussed how to make a balance sheet format. What common mistakes might pop up on a balance sheet if you are not careful as well as a few other topics relating to balance sheets? Now we will talk about the various formats which you can use to make a balance sheet. Here are the most commonly used balance sheet formats when making a balance sheet.
1. What is a Classified Balance sheet Format:
The classified format is the more preferred one by many. Seeing that it is quite simple to excite and understand, it is no surprise as to why that is. Following this format, you classify the company’s information, i.e., assets, liabilities and investors’ equity into subcategories. The detailed form does a great job of fusing a rather large number of individual accounts into a more accessible/ straightforward document.
The balance sheet data should be presented in a cataloged structure over multiple periods. That way your collected information is much easier to compare.
2. Common Size Balance Sheet:
The common size format presents all the information that would any other balance sheet, but you make an addition to that data. For this format, you have to make an additional column. In that column, you note the same information. Information like a ratio of the total assets for the asset line items or as a ratio of total liabilities and stakeholders’ equity for the liability and the shareholders’ equity line items.
This format is helpful in noticing the trend line. Lines which you can use to examine the relative changes in the sizes of various accounts.
3.Comparative Balance Sheet:
Using the relative format the most significant benefit that you get is the side-by-side comparison of the company’s assets, liabilities, and equity. Through this format, you understand that comparative chart of sorts at multiple points in time. So using this format can be quite useful for numerous reasons.
You could craft a comparative balance sheet at the end of each year for a couple of years. And you’ll get a paper that highlights the overall changes taken place during those years in the business.
4.Vertical Balance Sheet:
The following is quite self-explanatory, well to be fair most of the formats mentioned above were. When making a balance sheet and keep the presentation of the data limited to a single column of numbers that is the vertical balance sheet.
You place the asset line first then move on to the liabilities and finally end with the equity line items. Within each of the categories mentioned above, you keep the line items in decreasing order of their liquidity.