1
A Balance Sheet is a statement (not an account) that records an organization's assets and liabilities at a specific point in time, unlike Trading and P&L accounts which cover a period.
2
The fundamental accounting equation used is: Assets = Liabilities + Capital. The Balance Sheet must always balance, meaning total assets must equal total liabilities.
3
Balance Sheets are prepared using Real and Personal accounts, whereas Nominal accounts are handled in the Trading and P&L accounts.
4
Grouping refers to classifying items of similar nature under common accounting heads (e.g., grouping cash, bank, and debtors under 'Current Assets').
5
Marshalling refers to the systematic arrangement of assets and liabilities in the Balance Sheet, which can be done in two ways: Order of Liquidity (most liquid first) or Order of Permanence (most permanent first).