The balance sheet
Objective: Prepare a classified balance sheet that balances.
Recommended first: The income statement
The balance sheet shows financial position at one date. Assets are listed current first, then non-current, with contra assets deducted. Liabilities follow, then equity. Before closing, current-period income is shown within equity so the statement balances.
The balance sheet is a snapshot, so its heading states a single date. Current assets are expected to be used or collected within a year; non-current assets are longer-lived. Accumulated depreciation is shown as a deduction from the related asset. If the balance sheet does not balance, an entry is missing or a statement line is misclassified.
Before closing entries are posted, the period's net income has not yet moved into Owner Capital, so the platform shows it as current-period earnings within equity. After closing, the same amount appears inside capital and the totals are unchanged.
Check your work
- Does the heading state a date?
- Are contra assets deducted?
- Do total assets equal liabilities plus equity?
Assets $13,250 = liabilities $350 + equity $12,900.
| Account | Debit | Credit |
|---|---|---|
| Total assets | $13,250.00 | |
| Liabilities + equity | $13,250.00 |
Common mistakes
✗ Listing accumulated depreciation as a liability.
✓ It is a contra asset.
Guided practice
Use hints freely here.
Item 1 of 1
Balance sheet totals
Balances: Cash $5,700.00, Accounts Receivable $2,800.00, Equipment $8,500.00, Accumulated Depreciation $1,000.00, Accounts Payable $800.00, Notes Payable $500.00. Compute total assets, total liabilities, and owner's equity.
Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 1
Which items belong on the income statement?
Select every item that is reported on the income statement.
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Key terms
- Balance sheet
- Assets, liabilities, and equity at a date.
References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.