What is a Balance Sheet?
A Balance Sheet is an accounting report required by all companies registered at Companies House. It is also a useful tool for management to see how the company is performing financially, including how much the business owns or is owed at any given time.
A balance sheet shows the following information:
- Assets - Fixed Assets, Current Assets, intangible assets, stock, cash and money owed from customers
- Liabilities - Debts, money owed to suppliers, taxation, pensions
- Equity - Shares and retained earnings from the Profit and loss account.
Formatting a balance sheet
It is normally formatted vertical showing the following:
Assets - Liabilities = Equity
The two sides of the equation must always balance.
Creating a Balance sheet
Any business which runs accounting software will have the ability to create one within the software. If you are running a manual system then we have included a free excel balance sheet template.
Sample Balance sheet
The sample balance sheet shows the following information.
The company owns £18500 in Assets. The company is owed £5500 of liabilities this includes £3000 from customers and £2500 in a loan. This is financed by share capital and retained profits from the profit and loss account.
Return from Balance Sheet to Accounting Basics page
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