Difference between vertical and horizontal balance sheet
Answers
Answer:
Explanation:
A balance sheet is a statement of assets,liabilities and capital of a business or any organization at a point of time depicting the income and expenditure made by that particular organization.
It is prepared in two ways being,vertical and horizontal.
A vertical balance sheet is prepared in case when only one balance sheet is required as in the case of a small entity which operates at lower scales,whereas horizontal balance sheet is an additional balance sheet prepared by organizations that work on a bigger scale having different departments,branches etc.
A vertical balance sheet will have an asset and a liability column to depict the state of business but a horizontal balance sheet includes many more data with various branches and information.
Horizontal balance is the one prepared to be presented in annual reports and to be signed by auditors whereas vertical is prepared for internal uses.
Answer:
Hi.
The balance sheet is prepared by the management at the end of the period. If the entity is operating at small scale, then only one balance sheet is prepared. which is called as vertical balance sheet of which we all are aware of.
But if the entity is working at large scale and is operating with different branches, different products, then two balance sheets are prepared. i.e. One is Horizontal and other is Vertical.
Horizontal balance sheet elucidates more data. More columns are added in the balance sheet. Columns are made based on vital branches or vital products. Concept of segment is used for the clear image of the company. Segments which are shown in columns then a “total” of all the columns is shown at the end. Columns depict assets, liability, expenses, revenue related to segments and their total. Horizontal balance sheet is usually for internal purposes. But may be used for external purposes as well as the need arises.
Vertical balance sheet is a combined balance sheet of all the segments of the entity. Total column of horizontal balance sheet matches with the vertical balance sheet. This balance sheet is presented in the Annual report of the company. This is the balance sheet which is first shown and this balance sheet is signed by the Auditors.
Hope I am able to justify it. For any queries related to it, feel free to drop the comment.