A balance sheet is a statement of financial position of a business may shows detailing the balance of total assets and total liabilities. Usually, this details outlines the business’ assets, liabilities, equities, fixed and variable capitals, revenue, expenditures, as well debts. The balance sheet typically can be for annual.
The Balance Sheet is based solely upon this equation:
Assets = Liabilities + Shareholders’ Equity
Actually, the balance sheet can be quite a complex accounting calculation, but that does not mean you need to be a professional accountant to do it or to benefit from the practice. Normally, you have to remember that the balance sheet can provides a basic for computing rates of return & evaluating its capital structure.
Why balance sheet is important?
The balance sheet is important because it may provide an overall picture of the business. When you want to know what is actually business position is, you have to review the balance sheet, it may provide a snapshot of business. These information gives to your potential sponsors and investors to understand, how the business is functioning. Actually, the balance sheet is also help to evaluating and calculating returns from investments.
Actually the balance sheet gives an estimated forecast that help you to meaningful outcomes. This outcome will be help you to understand for better financial performance. It can be help to plan additional resources requirements, what actions require for performing better to get results, and how they will be financed.
Understanding balance sheet
It is obvious that the balance sheet is part of accounting system, hence you have to know about business accounting. If you want to take accurate decisions on the figures you have from balance sheet. The figures may help you to overview of the financials position, even you can identify tasks which are much costly and possible to reduce it. This action can be possible if you have numbers which may outlines from balance sheet.
Typically, the balance sheet accounting with three basic sections (1) Assets (2) Liabilities (3) equity. A basic formula is Assets = Liabilities + Equity. Entire balance sheet is depending on the daily expenditures, capitals, loans, debts etc. makes at end of the year as balance sheet. Actually, all the accounting ledgers’ figures are requiring to describe in balance sheet. It may be under various heads. Here is brief description of all major heads of balance sheet:
Usually, the assets will be considering as two major section are current, and fixed assets. In some businesses, charity, CRS, and goodwill are also considering as assets. Typically, under assets section you can include your assets and total the actual values of it.
The current assets are considering as short-term assets. In this section, you can include some categories which may under the head of assets are: Inventories, account receivable, expenditures, short-term investments, as well you can also include liquid assets.
Usually the fixed assets allow to include long-term assets such as land and equipment, machinery, stocks, bonds, property etc. When the business invests in the fixed assets, all the amount will be considering under this head. Even every year it also may need to be calculate depreciation from the assets.
The liabilities are obligations for the business, it may describe the amount with creditors for recent payments. These transactions usually have the consider as payable. Such as business balance sheet describing assets are $ 50000 and payables are $10000 mean, business equities are $40000. This is simply calculation that may describing the total payable.
In the current liabilities, typically you can describe the total debts or obligations. It may include all the account payable, short-term loans, salaries and wages, etc. Usually, this section only includes payable for financial year, mean for single year.
The common type of the debts that may consider as long-term liabilities can include under this head. Usually it may include long-term loans, debts, income tax, etc.
Normally, there are typical method to calculate owner’ equity is, do minus all the liabilities from the total assets will be remain owner’s equity. When any business owner starts the business, they will be put their money in the business. These financial assets will be considering in the balance sheet under the owner’s investment.
Free balance sheet examples and templates
The balance sheet is also called statement of financial position for the business. It may be in three major sections that entire balance sheet can be made with. It is assets, liabilities and equity. Actually creating a balance sheet can be tough job, if you don’t have enough knowledge of business accounting. But here are some ready made templates, which will help you to create balance sheet for your business.
Black balance sheet format
This is one of the simple, and unique template having all the details which are require to create a balance sheet for small business. More, this template is printable with A4 size paper. You can enter the values in the balance sheet, and print as you wish. This template made with excel application, hence you can easily update, edit and customize the design as per business requirements.
Balance sheet excel template
For the small businesses, creating a balance sheet can be complex accounting burden. If you don’t have a professional accountant, it will be tough job. Hence, here we made some ready made balance sheet template which have all the functions, information and fields that may help you to create balance sheet for small businesses. This balance sheet design made with excel sheet. Because excel have an advance tool, easy to calculate each figure, even you can make the formulas to make advance balance sheet for your business.
Printable balance sheet example
With this small business balance sheet template, you can enter values of assets, liabilities, calculate owner’s equity, regular expenditures, etc. This sheet provides a ready made formulas, and pre-defined calculations that make your work very easy. Even this sheet can possible to print with any side of paper. You have to just adjust some fields and you can print as your expecting.