What is the Account Form?

The account form refers to a two-column format for the presentation of the balance sheet. In this format, assets are listed in the first column, while liabilities and equity accounts are listed in the second column. This layout matches the accounting equation, where the asset total equals the total of all liabilities and equity. These totals appear at the bottom of the first and second columns, making it easier to verify that the totals match.

The other type of format for the balance sheet is the report format, where all account descriptions appear in the first column, beginning with assets and ending with equity; line item totals appear in the second column.

Disadvantages of the Account Form

There are several disadvantages associated with using the account form, which are as follows:

Space limitations. The main disadvantage of using the account form is that there is very little room to include additional columns in which the results from prior periods can also be listed. This minimizes your ability to present comparative balance sheets, which might have been used for trendline analysis. Instead, use the report format for comparative analyses.
Lack of detail. The account form tends to summarize information at a high level to fit everything on one page. This can mean that users don’t get the detailed breakdown of certain items unless they refer to supplementary notes or other detailed reports.
Not useful for trend analysis. Since the account form presents a snapshot of one period, it does not lend itself well to comparing multiple periods side-by-side. Comparative financial analysis often requires a columnar or report form (vertical) structure to facilitate comparisons over time.