The balances are arranged according to whether they are asset balances or liability or capital balances and gives the business's financial position at any given point in time. It is a snapshot at one particular point in time. For the purposes of this exercise we will be using the vertical format, as this is most widely used in all types of businesses and its form of presentation makes comparisons with other years easier. Fixed assets are the more or less permanent assets of the business. They are not normally for resale, e.g. premises, motor vehicles, fixtures and fittings, equipment and furniture.
Current assets are the types of assets used for trading purposes.
These assets are usually more liquid than the fixes assets. In other words they are more readily converted into cash. They include cash, bank, debtors and stock. They include mortgages, loans, hire purchase repayments longer than 12 months and debentures. Current liabilities represent the debts of the business which have to be paid in less than 12 months.