Negative balance sheet
sajjad
Registered Posts: 4
Hi,
can balance sheet be negative (both assets and liability are negative amounts).
can balance sheet be negative (both assets and liability are negative amounts).
0
Comments
-
Technically you can have a negative balance sheet if the owners equity were to become a negative, but that's a complicated scenario.
You won't have negative assets. You can't have a negative value of a vehicle, you can't have a negative fixtures & fittings value, you can't have negative equipment value. If your bank is overdrawn this becomes a current liability. So technically it is possible, but highly unlikely.5 -
In the sector I work in, using IFRS, the actuarially calculated defined benefit pension liability can dwarf the other net assets. The pension liability will create a negative pension reserve, so both both parts of balance sheet are negative (minus £343 million in my case).5
-
Hi, thank you for comment. I understand Assets can not be negative, but in my case i am using QuickBooks Pro accounting software and we have overdraft now since the system does not automatically change the negative bank account as short term liability therefore the assets are being negative and also the liability and equity is negative. So i am just confused whether is that ok
0 -
Where you put the overdraft will no impact on equity (which can be negative - though in that case you should be looking at whether the company is solvent and/or a going concern).
It should be included in current liabilities for stat accounts. For management accounts, it depends on the users preference in my experience.1
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 322 NEW! Qualifications 2022
- 159 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 93 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 273 VAT
- 92 Software
- 274 Tax
- 138 Bookkeeping
- 7.2K General accounting discussion
- 201 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership