Balance Sheet Example

The Balance Sheet is a statement listing the total assets, liabilities and owner's equity indicating the net worth of the company at a certain point in time. In other words, a balance sheet dated June 30, 2008 contains account balances as of that day and is a snapshot of the business' finances at that point.

Assets = Liabilities + Owner's Equity

A balance sheet must balance. That is, assets must equal liabilities plus owner's equity. Assets represent resources (such as cash, inventory, and accounts receivable) that are owned by or owed to the company. Liabilities and owner's equity are claims to those assets. It can be broadly viewed like this - the value of everything owned minus the money owed to others leaves the value of the owner's rights to the business.

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Balance sheets are usually formatted in one of two ways. The first is the account form which lists assets on the left and liabilities and owner's equity on the right. An example is shown below.

Your Business Name Balance Sheet June 30, 2008
Assets		Liabilities
Cash	$6,000.00	Accounts Payable	$1,000.00
Inventory	500.00	Owner's Equity
Land	6,500.00	Joe Smith, capital	12,000.00
Total Assets	$13,000.00	Total liabilities and owner's equity	$13,000.00

The other format used is the report form. It lists the assets first and the liabilities and owners equity next in vertical arrangement as in the example below.

Your Business Name Balance Sheet June 30, 2008
Assets
Cash	$5,000.00
Inventory	500.00
Land	5,500.00
Total Assets	$11,000.00
Liabilities
Accounts Payable	$1,000.00
Owner's Equity
Joe Smith, capital	$10,000.00
Total liabilities and owner's equity	$11,000.00

Balance sheets are often more detailed than the basic examples shown above. In actual practice, many balance sheets list assets and liabilities into long-term and short-term categories and include entries for accumulated depreciation and allowance for doubtful accounts.

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Balance Sheet Basics: Financial Management for Non-Financial Managers

Paperback: 152 pages

Publisher: Portfolio (August 30, 2004)