Balance Sheet format is prepared either in Horizontal form or Vertical form. In the Horizontal form of the balance sheet format, assets and liabilities are shown side by side and in the vertical form of the balance sheet, assets, and liabilities are shown vertically. A Balance Sheet is a statement showing the business's financial position at a given time. It is the statement showing the value of assets and liabilities of a firm at a certain date. The Balance Sheet shows the report of the property owned by the enterprise and the claims of the creditors and owners against these properties. The total of both sides (i.e., assets and liabilities) of the balance sheet should be equal.
The financial position of a firm is shown by its assets and liabilities on the given date. A company is financially stable when the assets are more than the liabilities, and it represents capital. The Balance Sheet is prepared from the Real Accounts and Personal Accounts. Ledger accounts that have not been closed having debit balances are shown on the assets side and those having credit balances are shown on the liabilities side.
Format of Balance Sheet
1. Horizontal Balance Sheet: In these form, assets and liabilities are shown side by side. This form is also called the account form of the balance sheet
2. Vertical Balance Sheet: In these assets and liabilities are shown one below the other in a vertical arrangement. This form is widely used by companies today because it is easy to read and analyze.
Difference Between Horizontal and Vertical Forms of Balance Sheet
| Basis of Difference | Horizontal Form of Balance Sheet | Vertical Form of Balance Sheet |
|---|---|---|
| Meaning | Assets and liabilities are shown side by side. | Assets and liabilities are shown one below the other. |
| Format | Two-sided format. | Single-column format. |
| Position of Liabilities | Liabilities are shown on the left side. | Liabilities are shown at the top. |
| Position of Assets | Assets are shown on the right side. | Assets are shown below liabilities. |
| Other Name | Account Form. | Report Form. |
| Presentation Style | Traditional style of presentation. | Modern style of presentation. |
| Ease of Analysis | Less convenient for analysis. | Easier to understand and analyze. |
| Space Required | Requires more space. | Requires less space. |
| Common Usage | Mostly used in manual accounting. | Widely used in companies and computerized accounting. |