Balance Sheet
Balance Sheet — Complete User Guide — Two Accounts Web
Comprehensive guide for generating, analysing, and understanding the Balance Sheet report — a snapshot of your business's financial position at a point in time
Table of Contents
- What Is the Balance Sheet?
- Enabling from the Customize Menu
- Field-by-Field Guide
- Settings Configuration
- Creating a Balance Sheet Report
- How the Balance Sheet Is Calculated
- Drill-Down Capabilities
- Sample Data and Report Output
- Common Issues and Solutions
- Accounting Regulation Compliance
1. What Is the Balance Sheet?
The Balance Sheet is a financial statement that presents a snapshot of a business's financial position at a specific point in time. It shows what the business owns (assets), what it owes (liabilities), and the residual interest of the owners (equity).
Unlike the Profit and Loss Statement (which covers a period of time), the Balance Sheet is a point-in-time report — it shows balances "as at" a specific date.
1.1 The Accounting Equation
Assets = Liabilities + Equity
This equation always holds true because every transaction recorded in the system follows double-entry bookkeeping: every debit has a corresponding credit. The Balance Sheet report reads the accumulated balances of all accounts and presents them in this structured format.
1.2 Assets, Liabilities, and Equity
| Section | What It Includes | Normal Balance | Examples |
|---|---|---|---|
| Assets | Resources controlled by the business that provide future economic benefits | Debit (Dr) | Cash at Bank, Accounts Receivable, Inventory, Fixed Assets, Investments, Intangible Assets |
| Liabilities | Obligations of the business arising from past events | Credit (Cr) | Accounts Payable, Employee Clearing, Tax Payable, Loans Payable, LC Payable |
| Equity | The residual interest in the assets after deducting liabilities | Credit (Cr) | Capital Accounts, Retained Earnings, Current Period Profit/Loss |
1.3 Three Layout Options
The Balance Sheet supports three presentation layouts:
| Layout | Format | Best For |
|---|---|---|
| Assets = Liabilities + Equity | Shows Assets on top, then Liabilities and Equity below — the traditional format | Most businesses — standard presentation per IAS 1 |
| Net Assets = Equity | Shows Assets minus Liabilities = Net Assets, then Equity | Compact reporting — highlights net asset position |
| Assets = Equity + Liabilities | Shows Assets on top, then Equity before Liabilities | Some jurisdictions — emphasises equity before obligations |
2. Enabling from the Customize Menu
The Balance Sheet report is a standard report — it is always available under:
- Reports → Financial Statements → Balance Sheet
It does not need to be enabled via Customize Menu. However, the related settings do depend on other tabs:
| Setting | Location | Tab Dependency |
|---|---|---|
| Balance Sheet Groups | Settings → Chart of Accounts → Balance Sheet | No dependency — always available |
| Balance Sheet Accounts | Settings → Chart of Accounts → Balance Sheet → New Account | No dependency — always available |
| Balance Sheet Groups Renaming | Settings → Chart of Accounts → Balance Sheet → Equity | No dependency — always available |
3. Field-by-Field Guide
3.1 Report Header Fields
Location: Reports → Financial Statements → Balance Sheet → New Report
| Field | Required? | Description |
|---|---|---|
| Title | No | An optional custom title for the report. Defaults to "Balance Sheet" if left blank. |
| Description | No | An optional label for the saved report (e.g. "FY 2026 Year-End BS"). Appears in the report listing. |
| Accounting Method | Yes | Choose Accrual Basis or Cash Basis. Accrual shows all transactions regardless of payment; Cash shows only settled transactions. |
| Layout | Yes | Choose one of three display layouts (see section 1.3). |
| Rounding | No | When enabled, all amounts are rounded to whole numbers. Useful for presentation-ready reports. |
| Exclude Zero Balances | No | When checked, accounts with zero balance are hidden from the report. |
| Show Account Codes | No | When checked, account codes are displayed alongside account names. |
| Groups to Collapse | No | Select specific Balance Sheet groups that should appear collapsed (expandable). Useful for grouping related items under a single heading. |
| Footer | No | Optional notes that appear at the bottom of the report. |
3.2 Report Columns (Periods)
Each report can contain one or more period columns for comparative analysis — for example, showing this year vs last year side by side.
| Field | Required? | Description |
|---|---|---|
| Date | Yes | The "as at" date for this column (e.g. 31-Mar-2026). All balances are calculated as at this date. |
| Division | No | If you use divisional accounting, filter this column to a specific division for segmented reporting. |
| Column Name | No | Optional custom column heading. If left blank, the date is used as the column heading. |
3.3 Report Footer
The Footer field accepts multi-line text. Common uses include:
- Disclosure notes (e.g. "See accompanying notes to the financial statements")
- Accounting policy statements (e.g. "Prepared under the accrual basis of accounting")
- Date of authorisation
- Rounding conventions
4. Settings Configuration
4.1 Balance Sheet Groups
Location: Settings → Chart of Accounts → Balance Sheet → New Group
Balance Sheet Groups allow you to organise accounts into meaningful categories on the Balance Sheet. The system comes with three root groups that cannot be deleted:
- Assets — all asset accounts
- Liabilities — all liability accounts
- Equity — all equity accounts
You can create sub-groups within each root group. For example, under Assets you might create "Current Assets" and "Non-Current Assets" sub-groups.
| Field | Required? | Description |
|---|---|---|
| Name | Yes | The display name for the group (e.g. "Current Assets", "Long-Term Liabilities") |
| Group | No | The parent group. If left blank, the group becomes a root-level group under the appropriate section. |
| Position | No | Sort order within the parent group. Lower numbers appear first. |
4.2 Balance Sheet Accounts
Location: Settings → Chart of Accounts → Balance Sheet → New Account
Custom Balance Sheet Accounts allow you to add new line items to the Balance Sheet. For example, "Prepaid Expenses", "Accrued Revenue", or "Deferred Tax Liability".
| Field | Required? | Description |
|---|---|---|
| Name | Yes | The display name on the Balance Sheet (e.g. "Prepaid Rent") |
| Code | No | Optional account code for the Chart of Accounts |
| Group | No | The Balance Sheet group this account belongs to (e.g. "Current Assets") |
| Cash Flow Statement | No | The Cash Flow Statement category — Operating, Investing, or Financing (see CFS guide) |
| Position | No | Sort order within its group |
| Inactive | No | Hides this account from selection lists and reports |
4.3 The Chart of Accounts
Location: Settings → Chart of Accounts → Balance Sheet
The Chart of Accounts shows the complete hierarchy of Balance Sheet groups and accounts. From here you can:
- View the full tree structure of groups and accounts
- Create new groups and accounts
- Edit existing groups and accounts
- Rename root groups (right-click on Equity to rename)
- Reorder items by editing their Position values
Any account that has no group assigned automatically falls into an "Uncategorized" bucket under Equity. This ensures that no account is ever lost, but uncategorised accounts may appear in unexpected places on the report.
4.4 System Accounts
The following Balance Sheet accounts are built into the system and cannot be deleted. Each has a predetermined role in the accounting engine:
| Account | Default Group | Role |
|---|---|---|
| Cash and Cash Equivalents | Assets | Tracks all cash, bank, and mobile money balances |
| Accounts Receivable | Assets | Tracks amounts owed by customers |
| Inventory On Hand | Assets | Tracks inventory balances at cost |
| Fixed Assets at Cost | Assets | Tracks the historical cost of fixed assets |
| Fixed Assets Accumulated Depreciation | Assets | Tracks accumulated depreciation on fixed assets (contra-asset) |
| Intangible Assets at Cost | Assets | Tracks the historical cost of intangible assets |
| Intangible Assets Accumulated Amortisation | Assets | Tracks accumulated amortisation on intangible assets (contra-asset) |
| Investments at Cost | Assets | Tracks investments in other entities at cost |
| Accounts Payable | Liabilities | Tracks amounts owed to suppliers |
| Employee Clearing Account | Liabilities | Tracks net pay owed to employees |
| Tax Payable | Liabilities | Tracks taxes collected but not yet remitted |
| Letter of Credit Payable | Liabilities | Tracks LC obligations to banks |
| Capital Accounts | Equity | Tracks owner/partner capital contributions |
| Retained Earnings | Equity | Tracks accumulated profits/losses (also absorbs all P&L activity) |
| Suspense | None (system account) | Temporary holding account for unmatched transactions — should always be zero |
5. Creating a Balance Sheet Report
- Go to Reports → Financial Statements → Balance Sheet
- Click New Report
- Enter a Title (optional, e.g. "ABC Trading — Balance Sheet")
- Enter a Description (optional, e.g. "FY 2026")
- Choose the Accounting Method — Accrual (default) or Cash Basis
- Choose the Layout — see section 1.3
- Add one or more Periods:
- Click Add to add a period column
- Enter the Date (the "as at" date)
- Optionally select a Division for segmented reporting
- Optionally enter a Column Name (e.g. "31 Dec 2026")
- Add additional periods for comparative analysis if desired
- Optionally adjust Rounding, Exclude Zero Balances, Show Account Codes
- Optionally select Groups to Collapse for compact presentation
- Optionally enter a Footer note
- Click Save
- The report will generate and display with the Assets, Liabilities, and Equity sections
6. How the Balance Sheet Is Calculated
This section explains the calculation logic behind the Balance Sheet. Understanding the formulas helps you interpret the numbers and troubleshoot unexpected results.
6.1 Transaction Loading and Pre-Processing
When the Balance Sheet is generated, the system first loads all General Ledger transactions and applies several pre-processing steps to ensure the balances are accurate:
- Cost of Goods Sold Calculation — determines COGS based on inventory valuation method (FIFO, moving average, or periodic average). This affects Inventory on Hand and the related expense accounts.
- Fixed Asset Disposal Entries — generates reversing entries for disposed assets, removing their cost and accumulated depreciation from the balance sheet and recording any gain or loss in the P&L.
- Intangible Asset Disposal Entries — same treatment as fixed assets for disposed intangible assets.
- Realised Investment Gains/Losses — calculates gains or losses on disposal of investments using the average cost method.
If Cash Basis is selected, additional conversion steps are applied:
- Sales invoices are matched to receipts and converted to cash basis
- Purchase invoices are matched to payments and converted to cash basis
6.2 Balance Calculation Per Period
For each period column in the report, the following calculation is performed:
Step 1 — Revalue foreign currency accounts up to the period date
Step 2 — Filter all transactions on or before the period date
Step 3 — Optionally filter by Division (if a division is selected)
Step 4 — Group transactions by Balance Sheet account
Step 5 — Sum the base currency amount for each account
Formula for each account balance:
Account Balance = Sum of (base currency amount) for all transactions
where the transaction's Balance Sheet account matches this account
and the transaction date is on or before the period date
Sign Convention:
- Asset accounts (Dr-normal): A positive balance means a debit balance (normal). Negative means a credit balance.
- Liability accounts (Cr-normal): A positive balance means a credit balance (normal). Negative means a debit balance.
- Equity accounts (Cr-normal): Same as liabilities.
On the report, the sign is adjusted for display:
- Assets are shown as positive numbers
- Liabilities are shown as positive numbers (with a label indicating they are subtracted in the accounting equation)
- Equity is shown as positive numbers
6.3 How Net Profit Flows into Retained Earnings
A critical design feature is how Profit and Loss activity appears on the Balance Sheet. Every transaction in the system is linked to a Balance Sheet account. For P&L transactions (income, expenses, gains, losses), the system automatically assigns them to the Retained Earnings account on the Balance Sheet.
This means:
Retained Earnings Balance = Opening Retained Earnings
+ Current Period Net Profit (from all P&L accounts)
+/− Opening Balance adjustments
When you see "Retained Earnings" on the Balance Sheet, it includes the accumulated profit or loss from all periods, including the current period. You do not need to perform a year-end closing entry — the system handles this automatically.
6.4 Foreign Currency Handling
When a business has accounts denominated in foreign currencies, the system revalues those accounts at each period end using the current exchange rate:
For each foreign currency account:
Step 1 — Calculate the balance in the foreign currency
Step 2 — Calculate the balance in the base currency at historical rates
Step 3 — Calculate what the balance SHOULD be at the current rate
Step 4 — Difference = foreign exchange gain or loss
Step 5 — Post the gain/loss to the Currency Gains/Losses P&L account
This revaluation happens automatically when the Balance Sheet is generated. The resulting exchange gain or loss flows through the P&L into Retained Earnings, so the Balance Sheet always reflects the correct base currency values.
6.5 Interdivisional Balancing
When the report is filtered by Division, the sum of all account balances within that division may not equal zero (divisions are not self-balancing by default). To handle this, the system automatically adds an Interdivisional Loan entry that forces the balance to zero:
If (Sum of all account balances) != 0:
Interdivisional Loan = −(Sum of all account balances)
Add Interdivisional Loan as a balancing entry
This ensures that each division's Balance Sheet balances independently. The Interdivisional Loan account appears under Financing Activities on the Cash Flow Statement.
7. Drill-Down Capabilities
Every amount shown on the Balance Sheet is clickable. Clicking any account balance opens a detailed transaction viewer showing the individual General Ledger transactions that make up that amount.
| Drill-Down Target | What You See |
|---|---|
| Any account balance (Cash, AR, AP, Inventory, etc.) | All transactions for that account up to the period date, showing date, description, contra account, debit/credit split, and running balance |
| Retained Earnings | All P&L transactions (income, expenses, gains, losses) plus opening balance adjustments — this is how net profit/loss is traced back to source transactions |
| Suspense | Transactions that could not be matched to a proper account — this should always be zero |
Each drill-down view displays:
- Date — the transaction date
- Transaction — the document type and reference (e.g. "Sales Invoice #1001")
- Counterparty — customer, supplier, or employee name
- Description — transaction narrative
- Amount — the transaction amount in base currency
- Running Balance — cumulative balance after each transaction
8. Sample Data and Report Output
8.1 Sample Setup
To demonstrate the Balance Sheet calculation, we use a trading business with the following opening balances as at 1 January 2026:
| Account | Group | Opening Balance | Dr/Cr |
|---|---|---|---|
| Cash at Bank — Main Account | Assets | 100,000 | Dr |
| Cash at Bank — Payroll Account | Assets | 50,000 | Dr |
| Accounts Receivable | Assets | 200,000 | Dr |
| Inventory On Hand | Assets | 80,000 | Dr |
| Fixed Assets — Cost | Assets | 500,000 | Dr |
| Fixed Assets — Accum. Depreciation | Assets | (100,000) | Cr |
| Accounts Payable | Liabilities | 150,000 | Cr |
| Capital Account — Owner | Equity | 500,000 | Cr |
| Retained Earnings (Opening) | Equity | 180,000 | Cr |
Verification of Opening Balance:
Total Assets = 100,000 + 50,000 + 200,000 + 80,000 + 500,000 − 100,000 = 830,000
Total Liabilities = 150,000
Total Equity = 500,000 + 180,000 = 680,000
Accounting Equation: 830,000 = 150,000 + 680,000 ✓
8.2 Opening Balance Sheet (as at 1 Jan 2026)
Balance Sheet — ABC Trading
As at 1 January 2026
Amount (BDT)
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
ASSETS
Current Assets:
Cash at Bank — Main Account 100,000
Cash at Bank — Payroll Account 50,000
Accounts Receivable 200,000
Inventory On Hand 80,000
430,000
Non-Current Assets:
Fixed Assets — Cost 500,000
Fixed Assets — Accum. Depreciation (100,000)
Net Fixed Assets 400,000
Total Assets 830,000
═══════
LIABILITIES
Current Liabilities:
Accounts Payable 150,000
EQUITY
Capital Account — Owner 500,000
Retained Earnings 180,000
Total Liabilities and Equity 830,000
═══════
8.3 Transactions During January 2026
| Date | Transaction | Amount | Dr Account | Cr Account | Effect on BS |
|---|---|---|---|---|---|
| 5-Jan | Sales Invoice #1001 (on credit) | 300,000 | Accounts Receivable | Sales Revenue (P&L) | AR ↑ 300,000 (asset) → Retained Earnings ↑ 300,000 (via P&L) |
| 10-Jan | Receipt from customer | 150,000 | Cash at Bank | Accounts Receivable | Cash ↑ 150,000, AR ↓ 150,000 (asset swap) |
| 12-Jan | Purchase Invoice #2001 (on credit) | 120,000 | Inventory | Accounts Payable | Inventory ↑ 120,000 (asset), AP ↑ 120,000 (liability) |
| 15-Jan | Payment to supplier | 80,000 | Accounts Payable | Cash at Bank | Cash ↓ 80,000, AP ↓ 80,000 |
| 18-Jan | Salary payment | 60,000 | Salary Expense (P&L) | Cash at Bank | Cash ↓ 60,000 → Retained Earnings ↓ 60,000 (via P&L) |
| 20-Jan | Fixed asset purchase (cash) | 50,000 | Fixed Assets — Cost | Cash at Bank | FA ↑ 50,000, Cash ↓ 50,000 (asset swap) |
| 25-Jan | Loan repayment | 10,000 | Loan Payable | Cash at Bank | Loan ↓ 10,000 (liability), Cash ↓ 10,000 |
| 28-Jan | Depreciation for January | 5,000 | Depreciation Expense (P&L) | Accum. Depreciation | Accum Depn ↑ 5,000 (contra-asset) → Retained Earnings ↓ 5,000 |
| 30-Jan | Rent payment (cash) | 15,000 | Rent Expense (P&L) | Cash at Bank | Cash ↓ 15,000 → Retained Earnings ↓ 15,000 |
P&L Summary for January 2026
Sales Revenue 300,000 Cr (income)
Salary Expense (60,000) Dr (expense)
Depreciation Expense (5,000) Dr (expense)
Rent Expense (15,000) Dr (expense)
─────────
Net Profit 220,000 Cr
Note: The Loan Payable was not in the opening balance — it represents a separate loan. For this example, the loan repayment of 10,000 assumes a loan existed.
Opening Setup (including Loan)
| Account | Opening Balance |
|---|---|
| Cash at Bank — Main | 100,000 Dr |
| Cash at Bank — Payroll | 50,000 Dr |
| Accounts Receivable | 200,000 Dr |
| Inventory On Hand | 80,000 Dr |
| Fixed Assets — Cost | 500,000 Dr |
| Fixed Assets — Accum. Depn | (100,000) Cr |
| Accounts Payable | 150,000 Cr |
| Loan Payable | 100,000 Cr |
| Capital Account — Owner | 500,000 Cr |
| Retained Earnings | 80,000 Cr |
Opening Verification:
Total Assets = 100,000 + 50,000 + 200,000 + 80,000 + 500,000 − 100,000 = 830,000
Total Liabilities = 150,000 + 100,000 = 250,000
Total Equity = 500,000 + 80,000 = 580,000
Accounting Equation: 830,000 = 250,000 + 580,000 ✓
8.4 Closing Balance Sheet (as at 31 Jan 2026)
Balance Sheet — ABC Trading
As at 31 January 2026
Amount (BDT)
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
ASSETS
Current Assets:
Cash at Bank — Main Account 35,000 ¹
Cash at Bank — Payroll Account 50,000
Accounts Receivable 350,000 ²
Inventory On Hand 200,000 ³
635,000
Non-Current Assets:
Fixed Assets — Cost 550,000 ⁴
Fixed Assets — Accum. Depreciation (105,000) ⁵
Net Fixed Assets 445,000
Total Assets 1,080,000
═════════
LIABILITIES
Current Liabilities:
Accounts Payable 190,000 ⁶
Loan Payable 90,000 ⁷
280,000
EQUITY
Capital Account — Owner 500,000
Retained Earnings (Opening) 80,000
Net Profit for January 220,000
Retained Earnings (Closing) 300,000 ⁸
Total Liabilities and Equity 1,080,000
═════════
Notes to the Balance Sheet:
- Cash: 100,000 + 150,000 (receipt) − 80,000 (payment) − 60,000 (salary) − 50,000 (FA) − 10,000 (loan) − 15,000 (rent) = 35,000
- AR: 200,000 + 300,000 (sale) − 150,000 (receipt) = 350,000
- Inventory: 80,000 + 120,000 (purchase) = 200,000
- FA Cost: 500,000 + 50,000 (purchase) = 550,000
- Accum Depn: (100,000) + (5,000) = (105,000)
- AP: 150,000 + 120,000 (purchase) − 80,000 (payment) = 190,000
- Loan: 100,000 − 10,000 (repayment) = 90,000
- Retained Earnings: 80,000 + 220,000 (net profit) = 300,000
8.5 Verification of Calculation
ASSETS:
Cash at Bank: 35,000 + 50,000 = 85,000
Accounts Receivable: 350,000
Inventory: 200,000
Fixed Assets (net): 550,000 − 105,000 = 445,000
─────────
Total Assets: 1,080,000 ✓
LIABILITIES:
Accounts Payable: 190,000
Loan Payable: 90,000
─────────
Total Liabilities: 280,000
EQUITY:
Capital Account: 500,000
Retained Earnings:
Opening: 80,000
Net Profit (from P&L): 220,000
Closing: 300,000
─────────
Total Equity: 800,000
ACCOUNTING EQUATION:
Assets (1,080,000) = Liabilities (280,000) + Equity (800,000)
1,080,000 = 1,080,000 ✓
NET PROFIT FLOW (via Retained Earnings):
Sales Revenue: 300,000
Salary Expense: (60,000)
Depreciation: (5,000)
Rent Expense: (15,000)
Net Profit: 220,000
Retained Earnings absorbs 220,000 ✓
Balance Sheet includes 220,000 in Retained Earnings ✓
DR = CR VERIFICATION:
Total Debits: 300,000 (AR) + 150,000 (Cash) + 120,000 (Inventory)
+ 80,000 (AP) + 60,000 (Salary) + 50,000 (FA)
+ 10,000 (Loan) + 5,000 (Depn) + 15,000 (Rent)
= 790,000
Total Credits: 300,000 (Sales) + 150,000 (AR) + 120,000 (AP)
+ 80,000 (Cash) + 60,000 (Cash) + 50,000 (Cash)
+ 10,000 (Cash) + 5,000 (Accum Depn) + 15,000 (Cash)
= 790,000
DR = CR ✓
BALANCE SHEET TIES TO TRIAL BALANCE:
Opening Assets: 830,000
Opening Liabilities: 250,000
Opening Equity: 580,000
830,000 = 250,000 + 580,000 ✓
Closing Assets: 1,080,000
Closing Liabilities: 280,000
Closing Equity: 800,000
1,080,000 = 280,000 + 800,000 ✓
9. Common Issues and Solutions
9.1 Balance Sheet Does Not Balance
Cause: This should never happen since the system enforces double-entry bookkeeping. If it does, there may be data corruption, or manual database changes have been made outside the application.
Solution: Check the Suspense account — if it has a non-zero balance, transactions have fallen into suspense because an account was not properly configured. Review individual transactions and reassign them to the correct accounts. If the Suspense account is zero and the BS still does not balance, contact support.
9.2 Suspense Account Shows a Balance
Cause: Transactions that could not be matched to a proper Balance Sheet account have been placed in the Suspense account. This typically happens when an Employee, Customer, or Supplier is not selected on a transaction that requires one.
Solution: Drill into the Suspense balance to see the individual transactions. Edit each transaction and ensure the missing field (Employee, Customer, Supplier, or account) is filled in. The Suspense account should always be zero.
9.3 Retained Earnings Shows an Unexpected Amount
Cause: Retained Earnings absorbs all Profit and Loss activity. A change in any P&L account (income, expense, gain, loss) flows through to Retained Earnings. It also includes opening balance adjustments.
Solution: Drill into the Retained Earnings balance to see the underlying transactions. Check if any opening balance entries or manual journal entries have been posted directly to Retained Earnings.
9.4 Account Appears in the Wrong Section
Cause: The account's Group assignment is incorrect. For example, a liability account assigned to the Assets group will appear under Assets.
Solution: Go to Settings → Chart of Accounts → Balance Sheet. Find the account and change its Group field to the correct parent group. If no group is assigned, the account falls into the "Uncategorized" bucket under Equity.
9.5 Inventory Balance Does Not Match Physical Count
Cause: Inventory is tracked using cost layering (FIFO or moving average). The Balance Sheet shows inventory at cost, not market value. If inventory has been damaged or become obsolete, an inventory write-off may be needed.
Solution: Create an Inventory Write-Off transaction to adjust the inventory balance to its net realisable value. The impairment loss is recognised in the P&L.
9.6 Fixed Asset Balance Does Not Match Purchase Records
Cause: Fixed assets are tracked at cost. Accumulated depreciation is tracked separately as a contra-asset. If a fixed asset has been disposed, the disposal entries remove both the cost and accumulated depreciation from the balance sheet.
Solution: Fixed Asset disposals should be processed through the Fixed Assets module (not through manual journal entries). This ensures that the disposal entries are correctly generated, removing the cost and accumulated depreciation and recording any gain or loss.
9.7 Multi-Period Report Shows Wrong Comparison
Cause: Each column shows balances as at its specific date. If you are comparing 31-Dec-2025 with 31-Dec-2026, the first column shows balances at the end of 2025, and the second shows balances at the end of 2026. The difference between the two columns is NOT a period movement — it is the change in position between the two dates.
Solution: This is correct behaviour for a Balance Sheet. To analyse movements, use the Cash Flow Statement or compare multiple Balance Sheets from different dates.
10. Accounting Regulation Compliance
10.1 IAS 1 — Presentation of Financial Statements
| Requirement | Reference | How This System Complies |
|---|---|---|
| Statement of financial position (balance sheet) as a primary statement | §10(a) | The Balance Sheet is a standard report under Reports → Financial Statements, generated as a complete statement |
| Show assets, liabilities, and equity separately | §54 | The Balance Sheet has three distinct sections: Assets, Liabilities, and Equity — each clearly labelled |
| Current/non-current distinction | §60 | User-defined Balance Sheet Groups allow current/non-current classification through group hierarchy (Assets → Current Assets, Non-Current Assets) |
| Comparative information required | §38 | Multiple period columns can be added for comparative analysis (e.g. current year vs prior year) |
| Specific line items (property, plant, equipment; inventories; trade receivables; trade payables; equity capital; retained earnings) | §54(a)-(r) | All required line items are built as system accounts (Fixed Assets, Inventory, AR, AP, Capital Accounts, Retained Earnings) |
| Material items presented separately | §29 | Each Balance Sheet account appears as a separate line. Custom accounts can be added for additional material items |
| Offsetting of assets and liabilities prohibited | §32 | Assets and liabilities are always presented separately. Contra-assets (accumulated depreciation) are shown as reductions of assets with explicit labels |
10.2 IAS 16 — Property, Plant and Equipment
| Requirement | Reference | Compliance |
|---|---|---|
| Cost model: cost less accumulated depreciation | §30 | ✓ Fixed Assets at Cost and Fixed Assets Accumulated Depreciation are separate accounts, shown net on the BS |
| Separate disclosure of cost and accumulated depreciation | §73 | ✓ Both accounts appear as separate line items, allowing users to see the gross cost and accumulated depreciation |
| Disposals removed from balance sheet | §67 | ✓ The disposal pipeline removes both cost and accumulated depreciation when an asset is disposed |
10.3 IAS 38 — Intangible Assets
| Requirement | Reference | Compliance |
|---|---|---|
| Cost model: cost less accumulated amortisation | §74 | ✓ Intangible Assets at Cost and Accumulated Amortisation are separate accounts, shown net on the BS |
| Separate disclosure of cost and accumulated amortisation | §118 | ✓ Both accounts appear as separate line items |
10.4 IAS 2 — Inventories
| Requirement | Reference | Compliance |
|---|---|---|
| Inventories measured at lower of cost and NRV | §9 | ✓ Inventory is tracked at cost. Write-offs can be processed to reduce to NRV. Cost is calculated using FIFO, moving average, or periodic average |
| Cost formulas (FIFO, weighted average) | §25-27 | ✓ Multiple costing methods are supported. The chosen method determines how inventory layers are consumed |
10.5 IFRS 9 — Financial Instruments
| Requirement | Reference | Compliance |
|---|---|---|
| Financial assets measured at amortised cost or fair value | §5.2 | ✓ Cash, AR, and AP are at amortised cost. Investments can be tracked at cost with market value increments |
| Impairment of financial assets | §5.5 | ✓ Bad debts can be written off through credit notes or journal entries, reducing AR to recoverable amount |
10.6 IAS 21 — Foreign Exchange
| Requirement | Reference | Compliance |
|---|---|---|
| Monetary items translated at closing rate | §23 | ✓ Foreign currency accounts are revalued at period-end using the current exchange rate. The resulting gain/loss flows to the P&L |
| Exchange differences recognised in profit or loss | §28 | ✓ FX gains/losses are posted to the Currency Gains/Losses account in the P&L |
10.7 IAS 7 — Statement of Cash Flows (Cross-Reference)
The Balance Sheet and Cash Flow Statement are linked. Changes in Balance Sheet accounts drive the Cash Flow Statement:
- Changes in current assets (AR, Inventory) → working capital adjustments in the CFS
- Changes in Fixed Assets → investing activities in the CFS
- Changes in Loans and Capital → financing activities in the CFS
- Changes in Cash → reconciled in the CFS cash reconciliation section
10.8 DR = CR Verification
Sample Data Verification:
Total Debits: 790,000
Total Credits: 790,000
DR = CR ✓
Opening Balance Sheet:
Assets 830,000 = Liabilities 250,000 + Equity 580,000 ✓
Closing Balance Sheet:
Assets 1,080,000 = Liabilities 280,000 + Equity 800,000 ✓
Net Profit flows to Retained Earnings: 220,000 ✓
Balance Sheet ties to Trial Balance ✓
End of Balance Sheet Guide