Balance Sheet
When preparing the balance sheet, should we incorporate the total amount reflected in our bank balance (including both credits and debits) into the assets and liabilities section?
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Balance sheet
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Yes, the balance sheet includes the total amounts from your bank accounts under assets. Specifically, the bank balance is recorded as either “cash” or “cash equivalents” on the asset side. This amount reflects the total of your bank account balances, which would encompass any funds that are readily available, regardless of whether they are in credit or debit. However, keep in mind that a negative balance (overdraft) in a bank account would be considered a liability rather than an asset. So, if you have a credit balance, it goes under assets, while any overdraft situation would be recorded under liabilities.