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 the amount of assets a business owns including equipment, bank balance and how much is owed at any given time.
The report provides information that is useful when assessing the financial stability of a company. There are a number of financial ratios that can be used to assess the business's financial position, these include liquidity ratios and gearing ratios. These ratios are used by banks and suppliers to work out if the can offer a loan, overdraft or credit facility.
A balance sheet shows the following information:
We have a free Excel Balance Sheet template for you to download free of charge. This template is not suitable for submitting to Companies House, but will enable a small business to produce a report for their year end. If you are a limited company you will need to get you accountant to produce a balance sheet as part of your accounts to submit to Companies House.
The report is normally formatted vertically showing the following:
Assets - Liabilities = Equity
The two sides of the equation must always balance.
Below is a typical example of a balance sheet, each link provides further details and how to account for them.
|Total Fixed Assets||900|
|Total Current Assets||1650|
Any business which runs accounting software will have the ability to create the report within the software. If you are running a manual system then we have included a free Excel balance sheet template.
The sample report 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.
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