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Example

Here is an example of how to prepare the balance sheet from our unadjusted trial balance and financial statements used in the accounting cycle examples for Paul’s Guitar Shop.

Account Format Balance Sheet

Report Format Balance Sheet

As you can see, the report format is a little bit easier to read and understand. That is why most issued reports are presented in report form. Plus, this report form fits better on a standard sized piece of paper.
One thing to note is that just like in the accounting equation, total assets equals total liabilities and equity. This is always the case. If you are preparing a balance sheet for one of your accounting homework problems and it doesn’t balance, something was input incorrectly. You’ll have to go back through the trial balance and T-accounts to find the error.