Key Accounting Information

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A balance sheet is one of a business' main financial statements, along with the income statement and cash flow statement. It summarises the financial position of your business at a point in time, by providing a snapshot of how much you own and how much you owe.[1]

There are three key sections to a balance sheet:

  • Assets: items of future economic benefit belonging to the business. They are divided into two categories; current assets and non-current assets. 
  • Liabilities: future economic obligations that have been committed to by the business. Similarly to assets, liabilities are divided into current liabilities and non-current liabilities.
  • Equity: the residual interest in the assets of a business after deduction of its liabilities. Equity is also divided into two categories, capital and retained earnings.

 

You can prepare a Balance Sheet by following the format below:

(Your Business Name)
Balance Sheet
as at __ / __ / ____
    $
Current Assets    
Cash at bank   0
Inventory   0
Accounts Receivable   0
Other current asset   0
Other current asset   0
Total Current Assets   Add all current assets
     
Non-Current Assets    
Equipment and Machinery   0
Land and Buildings   0
Other non-current asset   0
Other non-current asset   0
Total Non-Current Assets   Add all non-current assets
Total Assets   Current assets non-current assets
     
Current Liabilities    
Accounts Payable   0
Interest Payable   0
Other current liability   0
Other current liability   0
Total Current Liabilities   Add all current liabilities
     
Non-Current Liabilities    
Mortgage payable   0
Other non-current liability   0
Other non-current liability   0
Total Non-Current Liabilities   Add all non-current liabilities
Total Liabilities   Current liabilities non-current liabilities
     
Net Assets   Total assets - total liabilities
     
Equity    
Business Owner, Capital   0
Retained Profits   0
Other Equity   0
Other Equity   0
Total Equity   Add all equity accounts
     
Note: Net Assets should equal Total Equity

To assist you in developing your balance sheets, you can download the following sample templates:

[1] Curtis, V. 2004. Small Business for Dummies. 2nd edn. Wiley Publishing Australia Pty Ltd, Milton QLD.

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Financial Plan

Q.1 Prepare a 12 month and 5 year balance sheet for your business. To ensure accuracy and consistency, the figures should be taken from your profit and loss statements. You can download sample templates here. Give Answer