Balance Sheet

A Balance Sheet is an accounting report required by all companies registered at Companies House and is useful for self-employed to see how their business is performing. It allows you to see a snap shot of your business on a given date, normally month or year-end. It is also a useful tool for management to see the value of assets a business owns including equipment, bank balance and what it owes at any given time. We have included a balance sheet example and details.

The report provides information that is useful when assessing the financial stability of a company. There are financial ratios that can be used to calculate the business’s financial position; these include liquidity ratios and gearing ratios. They are used by banks and suppliers to work out if the can offer a loan, overdraft or credit facility.

It shows the following information:

AssetsFixed Assets, Current Assets, intangible assets, stock, cash and money owed from customers (accounts receivable ledger).

Liabilities – Debts, money owed to suppliers, taxation, pensions

Equity – Shares and retained earnings from the Profit and Loss account.

Balance Sheet Template

We have a free Excel Template for you to download. It 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 your accountant to format the report as part of your accounts to submit to Companies House.


Formatting a Balance Sheet

The report is formatted vertically showing the following:

Assets – Liabilities = Equity

The two sides of the equation must always balance.

Below is a typical balance sheet example, each link provides further details and how to account for them.

Assets

Fixed Assets1000
Accumulated Depreciation100
Total Fixed Assets900

Current Assets

Stock2500
Debtors150
Bank1250
Total Current Assets1650
Total Assets2550

Liabilites

Creditors300
Loan200
Credit card75
Total Liabilities575
Net Assets1975

Equity

Capital200
Retained Profit1775
Total Equity1975

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 template.

Balance Sheet Example

balance sheet exampleThe example 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. It is financed by share capital and retained profits from the profit and loss account.

Return from balance sheet to Accounting Basics page.