The Balance Sheet with video presentation

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Having considered the trial balance, we can now treat the statement of financial position.
A statement of financial position was, before now, called the balance sheet. It is a statement that shows the financial position of a business firm at a given point in time. It shows the list of assets and liabilities of the business firm arranged in such a way that the total of all assets will equal the total of all liabilities. This means that the statement of financial position is based on the accounting equation 
The statement of financial position takes into consideration the end-result of the income statement (profit or loss account) as net profit (profit after tax) forms part of the liabilities that have to be appropriated to those who have proprietary interest in the business entity.
The statement of financial position is a principal requirement in the presentation of financial statements in line with IAS1 - International Accounting Standard No.1, which deals on presentation of financial statement.



Having understood what the balance sheet is all about, let's look at the components (or elements) of the balance sheet.
Note: The balance sheet is also explained in the following video below 

Elements of The Balance Sheet.
The elements of the statement of financial position are three in number. They are 
  1. Assets
  2. Liabilities
  3. Equity
Assets.
Assets have been described as the resources of an organisation. In other words, assets are the resources of an entity and which meet the following criteria:
  1. It is owned as a result of past event;
  2. It is probable that future economic benefits will flow from it to the entity, and
  3. It must be controllable by the entity
In summary, therefore, an asset is any resource onwed and controlled by an entity as a result from past transaction and from which the entity expects to get some economic benefits.
Liabilities


 A liability is any debts owed by the entity. In other words, a liability is an obligation of the entity, the settlement of which is expected to result in the outflow on economic resources.

Equity
This is the difference between assets and liability.
For sole proprietorship, equity can be described as the capital introduced to start the business. It include profits and exclude drawings made by the owner of the firm.
For partnership, equity refers to the capital contributed by the partners.
For corporations, equity is seen as the share capital and retained earnings overtime.

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