Financial Statements of Sole Proprietorship, Page 13

The Sections of the Balance Sheet

A permanent account is an asset, liability, or owner’s equity account where balance is carried over from year to year. The balance sheet includes the following sections: 

• Heading 
• Assets 
• Liabilities and Owner’s Equity

Heading Section
The heading of a balance sheet contains three parts. 

1. The name of the business [whose business it is] 
2. The name of the financial statement report [what] 
3. The date of the balance sheet [when]

Assets Section
The assets section of the balance sheet normally presents assets in the order that they will be converted into cash or used in operations. Cash is presented first, followed by receivables, supplies, prepaid insurance, and other assets. The more permanent assets (such as land, buildings, and equipment) are shown next.

The Liabilities and Owner’s Equity Section
In the liabilities section of the balance sheet, short-term (or temporary) liabilities are written first. It is followed by long-term liabilities, then owner’s equity. The arrangement of assets, liabilities, and owner’s equity in a particular order is called Marshalling.