What is an unclassified balance sheet
>> November 26, 2012
Balance sheet is just list on the basis of accounting equation. In balance sheet, total of assets side will always equal to total of liabilities side. When we make balance sheet by classification of total assets and total liabilities, it is called a classified balance sheet. It will not create confusion about the nature of an asset or liability.
Suppose in unclassified balance sheet, we show debtors then we show investments and then we show cash in hand. At that time, readers may confuse about investment. It may be short term or long term. For removing the confusion, it is very necessary to classify the assets and liabilities and make its list with systematic way.
1st Step. Collect the Accounting Data
First of all, you should collect all raw accounting data which are very necessary for making
a classified balance sheet. If you did not make the trial balance. take the balance of ledger accounts and make the list of trial balance for checking mathematical mistakes. On this balance of ledger, you have to make the classified balance sheet whose list has been shown in the trial balance.
2nd. Classify the Accounting Data
Now, classify the accounting data. Suppose, total asset will be classify into current assets and fixed assets, long term investment and intangible assets. Like this, we also classify the liabilities.
If you want to study the classification of assets, study following.
If you want to classify the liabilities, study following
3rd. Make the Format of Classified Balance Sheet
In scribe, Mrycllns has made the format of classified balance sheet proper way. I have little modified it and showing here for you.Source: www.svtuition.org