Question

A classified balance sheet can be presented in either a report or an account form. Although either is acceptable, the report form is more popular. True O False

Answer 1

This statement is True.

A balance sheet is often created in a report form. Companies using this type of statement list the three different sections one on top of the other. It begins by listing the statement name, company name and statement date. Below that, list all assets of the company. Underneath the assets, list the liabilities and finally, list all equities. It is called the report form because there are no individual sides. Each category is simply listed in order.

The account form balance sheet is presented in a horizontal format, with information in two columns beside each other. The left column of the account form balance sheet lists assets, while the right column lists liabilities and equity. Naturally, the last line in each column lists the total value of all assets and liabilities and equity, respectively. The account form balance sheet can be easier to use when information is being presented for multiple periods, and it allows the reader to verify that the ledger is in balance at a glance.