iven by John Arnold, Tony Hope and Alan Southworth: "The balance sheet is the most inituitive and easily understood document of accounting. Most of us at some stage in our lives will be required to compute a listing of our possessions. Such a listing of possessions is a major element in the construction of a balance sheet.". Far from being a precise statement on what the balance sheet is, it can easily be perceived from a phylosofical and psychological view point, and then, though defined at present times, it can be related with the historical side of the balance sheet. The link is as simple as that: one would generally describe his possessions by listing the things he has and those that should be returned to him, as well as his debts to other people, further more, he would intuitively put those "lists" on the scales to find out what his financial state is, or "to get the balance". To extend this etimological analogy a bit more, by putting on the different sides of the scales the lists of his possessions and his debts, one would, probably intuitively, measure his financial position with the height difference that would occur between the sides of the scales. Then, in the prossess of separation of the owner from the manager, this way of measurement of a person's financial state, was naturally transferred into what we now call an enterprise's balance sheet. Furthermore, the fundamental method of "scaling" possessions and debts continues be the basis of this document. As we all know a fundamental characteristic of every balance sheet is that the total figure for assets always equals the total of liabilities plus owners' equity. As we have already seen, actually the above simple equation, representing the theoritical essense of this document, and a basis of its practical side, is the reason for it to be called balance. Actually, the two sides of the balance sheet are merely two views of the same business property.Having defined the essence ...
