A balance sheet shows the financial position of a company, generally set at the end of a fiscal year. It contains a listing of the worth of the company showing the assets and liabilities held by the company as well as the distribution of those assets into financial groupings by liquidity. Preparing a cash basis balance sheet handles income by acknowledging revenue and expenses only when cash is received or expenses paid. For your balance sheet, this means leaving out any accounts payable or account receivables as part of the balance.
Place a title and heading for the balance sheet at the top of the page. Use the company name followed by “Balance Sheet” as the title with the dates covered by the balance sheet as the second line of the heading.
Create the Assets section of your balance sheet under the heading, “Assets.” Follow this with the subgroup “Current Assets.” List the company’s current assets beneath this grouping, slightly indented for easy reading with each asset placed on a separate line. Add space to the right of the asset name, and then write the asset worth. Rank the assets from most liquid to least. Begin with cash, then marketable securities, followed by loans receivable, inventory, bonds held, any property or equipment, intangibles such as patents held, and ending with any deferred charges due but held off in collecting until after the balance sheet period. You can find all financial information necessary for creating the balance sheet in the company’s financial records for the year.
Add the assets up, and create a line beneath the group labeled “Total Assets”, listing the total beneath the listing of asset worth.
Create a second subgroup labeled “Current Liabilities.” This listing should contain all monies owed to outside parties ranked according to due dates. Include any loan notes, followed by trade accounts, expenses incurred but not yet due during the balance sheet period, long-term debts such as corporate bonds, then any other long-term liabilities like mortgages on property, equipment costs, notes, payroll and sales taxes. Place the amount owed in the liability category after a space next to each liability type. Add the liabilities, and add a line beneath the listing labeled “Total Liabilities” with the total listed beneath individual liability type amounts.
List the final subgroup of the balance sheet “Stockholder’s Equity.” This is the actual equity owed to stockholders in the company from their capital investments. List in the order the equity would pay out should the company dissolve. Begin with preferred stock, then common, followed by capital paid into the company without the release of actual shares, any retained earnings for the year, and ending with treasury stock held by the company. As with the other sections, include the total value of the equity on the same line as the equity listing, and complete the group with a "Total" line.
Larry Simmons is a freelance writer and expert in the fusion of computer technology and business. He has a B.S. in economics, an M.S. in information systems, an M.S. in communications technology, as well as significant work towards an M.B.A. in finance. He's published several hundred articles with Demand Studios.