It is important that accounting records are kept immediately any business is started so that the actual amount invested in the business can be known. To start a business unit. Assets have to be acquired and liabilities incurred before the real operations of the business will start. These assets and liabilities are conventionally recorded in the Balance Sheet. The Balance Sheet is the financial statement that states the Business:

· Assets;
· Liabilities;
· Capital or any form of funding which has financed the Assets.

ASSETS
Assets are those things that belong to the business or what the business owns they are classified into;
Fixed Asset
Current Assets and
Intangible Assets

Fixed Assets
These are assets of permanent nature and they are expected to last in a business for more than one Accounting/Financial Year
some of these are identifiable Fixed assets
· Land and Building
· Property, Plant and Equipment
· Motor Vehicles
· Current Assets
Current Asset
These are assets that can be easily converted into cash at short notice. they can also be referred to as Liquid Assets. here are some classifications of Current Assets

Bank Balance
Represents the entity balance with the various bank as at the end of the accounting/financial year

Cash In Hand
Represent physical cash at the various units or departments as at the year end.

Stock/Inventory
Which are goods held for resale, raw materials held for production of salable goods, work-in-progress which is in the process of completion to a finished goods.

Debtors/Receivables
These are people who are owing the entity out of their transactions as at the Financial year end.

Prepayments
These are payments made in advance but not yet rendered but will be rendered in the future. e.g. Rent paid in advance.(Prepayments are usually used by entity using the Accrual basis of Accounting)
Intangible Assets
These are assets though they exist, are not visibly seen or touched but add value to the entity. they include Goodwill, copyright, patents

2.LIABILITIES

Current Liabilities
Current Liabilities represent short term commitment of an entity. they are expected to be paid within one year, they include

Creditors/Account Payable
Which may arise from purchase of goods or services of which payments have not been made as at the balance sheet date

Accruals
These are payable arising from services rendered to an entity the services must have been rendered before the balance sheet date but payments have not been made at that date. They include outstanding bills for rents utilities and of course wages. .(these method are usually used by entities that adopt the Accrual basis of Accounting)
Bank Overdraft
This arise when the entity has a short term borrowing from a bank , where the entity is allowed to overdraw more than its credit balance with the bank.
Loan
Which may arise when the entity borrowed money from a bank or other financial institutions or persons.
Capital
This represents the amount of money the owner(s) have invested into the business, by Standard practice, this amount is shown as a liability because the owner is seen as different from the business, which by law is a legal entity
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