The balance sheet is a statement, which shows the financial POSITION of a business on a particular date. It is a statement of BALANCES of all the accounts real and personal, debit balances of all such accounts represent assets and credit balances represent the liabilities.

1. Principal Objective:
The main purpose of preparing balance sheet is to know the financial position of the business at a particular date.

2. Subsidiary Objectives:
Though the main aim is to know the exact financial position of the firm at a particular date, yet it serves other purpose as well.

• It gives information about the actual and real owner’s equity. Though the capital of the owner indicates owner’s equity, yet some other liabilities are to be accounted for against it also.
• It helps the firm to make provisions against possible future losses. A PROVISION is MADE in the form of the RESERVES.

The balance sheet is a statement, which shows the financial position of a business on a particular date. It is a statement of balances of all the accounts real and personal, debit balances of all such accounts represent assets and credit balances represent the liabilities.

1. Principal Objective:
The main purpose of preparing balance sheet is to know the financial position of the business at a particular date.

2. Subsidiary Objectives:
Though the main aim is to know the exact financial position of the firm at a particular date, yet it serves other purpose as well.