Beruflich Dokumente
Kultur Dokumente
Balance Sheet
Objective:
The balance sheet is a snapshot at a single point in time of the company's accounts, covering its
assets, liabilities, and shareholders' equity. The purpose of the balance sheet is to give users an
idea of the company's financial position along with displaying what the company owns and
owes.
Requirements:
Structurally, a balance sheet is relatively simple in concept. Every company's balance sheet is
comprised of three elements:
Assets: Assets to take two forms: Tangible assets, which have a physical form, such as a
building or a piece of machinery and Intangible assets, which usually involve a legal right or
claim such as a patent.
Liabilities: Debts of the company, including long-term debt, notes payable, and accounts
payable.
Equity: Also referred to as shareholder's equity, these are the resources that have been invested
by the owners of the company or the excess earnings retained by the company
Assets = Liabilities + Stockholders Equity
Note: Before the balance sheet can be prepared you must do an income statement and a retained
earnings statement because all three statements are interrelated.
To build a balance sheet, always start with three-line header which includes the name of the
company, the title of the statement and the period for which the statement is being prepared. In
the case of a balance sheet, the date us always the end date for that fiscal period.
2. On the next few lines on the statement, list all assets in order of liquidity (how fast the
asset can be changed into cash). Place the currency amount in the middle column.
3. Add the entire asset dollar amount together and place the total in the far right hand
column. Place the label Total Assets in the far left hand columns.
2. On the next line in the far left hand column, place the section label Liabilities. Since
this is a label no currency amount will be placed in the right hand column.
3. Next list all the liabilities in order of magnitude (from the highest to the lowest). Place
the currency amounts in the right column.
4. Finely add the currency amounts in the middle column, and then place the total in the far
right hand column. Place the label Total Liabilities in the far left hand Column
5. Next Place the section heading Stockholders Equity in the far left hand column. No
currency amount is required for this line.
6. List in order on the next two lines Common Stock and Retained Earnings
7. The final line will be labeled Total Liabilities and Stockholders Equity. Add the total
liabilities and total stockholders Equity together and place the dollar amount in the left
hand column.
8. Review to make sure the Total of this line must match the total assets line in order for the
statement to balance
9. Double underline the total and do not forget the dollar sign