Balance Sheet Accounts
What are Balance Sheet Accounts?
A balance sheet account is an account found in the balance sheet area of the accounts.
![bsa3](https://seeaccountingnow.online/wp-content/uploads/2021/06/bsa3.jpg)
How it Works
The balance sheet shows what a business owns verses what it owes.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa2.jpg)
To do this, the balance sheet has three classes of account.
![bsa3](https://seeaccountingnow.online/wp-content/uploads/2021/06/bsa3.jpg)
Asset Accounts
Asset accounts show things the business owns.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa4.jpg)
This includes money the business holds in the bank.
![bsa5](https://seeaccountingnow.online/wp-content/uploads/2021/06/bsa5.jpg)
It also includes tangible assets like equipment and inventory.
![bsa6](https://seeaccountingnow.online/wp-content/uploads/2021/06/bsa6.jpg)
Asset accounts also show money owed to the business by customers.
![bsa7](https://seeaccountingnow.online/wp-content/uploads/2021/06/bsa7.jpg)
Liability Accounts
Liability accounts show money owed to others.
![bsa8](https://seeaccountingnow.online/wp-content/uploads/2021/06/bsa8.jpg)
For example, a loan account shows money owed to a lender.
![bsa9](https://seeaccountingnow.online/wp-content/uploads/2020/06/bsa9.jpg)
Supplier’s accounts show money owed to suppliers.
![bs20](https://seeaccountingnow.online/wp-content/uploads/2021/06/bs20-1.jpg)
Equity
Equity accounts show money owed to the owner and shareholders.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa11.jpg)
For example, the capital account shows capital the owner and/or shareholders have invested in the company.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa12.jpg)
The retained earnings account shows profit the company has acquired over time.
![bsa13](https://seeaccountingnow.online/wp-content/uploads/2021/06/bsa13.jpg)
Asset Accounts are Permanent Accounts
The accounts that make up the balance sheet are classified as permanent or real accounts.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa14.jpg)
Unlike income statement accounts, they are not closed out at the end of the accounting period.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa15.jpg)
Instead, they are continually updated with transactions in following accounting periods.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa16.jpg)
This way, a balance sheet can be prepared at any time.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa17.jpg)
It provides a snap shot of what the business owns versus what it owes at that time.
![](https://seeaccountingnow.online/wp-content/uploads/2020/03/bsa18.jpg)
© R.J. Hickman 2020