82. The accounts now open in the ledger, other than proprietor's account, exhibit all assets and liabilities of the business with the exception of the present inventory, which is included in the trading account. The amount of the inventory is transferred to the debit of a merchandise inventory account.
The books are now said to be closed, there being no open accounts except those representing assets or liabilities of the business.
BALANCE SHEET
83. A statement of the assets and liabilities of a business is called a balance sheet. If the assets exceed the liabilities, the difference is the present worth. If the liabilities exceed the assets, the business is insolvent, and the difference or balance shows the amount of insolvency.
The balance sheet is prepared from the ledger balances after the books have been closed. In arranging the accounts on a balance sheet, the assets should be listed first, followed by the liabilities. The balance will agree with the balance shown in the proprietor's or investment account.
For the business of a single proprietor, it is customary to list the accounts in the following general order:
First—Cash in bank and office.
Second—Open accounts and bills receivable.
Third—Merchandise per inventory, store fixtures, etc.