Balance Sheet

Shopping on line can be easy, simple and save you lots of money. It can also take a lot of your time, frustrate you, and result in unwanted purchases. Now the same can be said for regular high street shopping, but with the vast opportunity presented by the Internet it will pay you to spend a few minutes reading this and understanding how to better optimize your Balance Sheet shopping experience:

1. Compare - without doubt the biggest advantage that the Balance Sheet offers shoppers today is the ability to compare thousands of Balance Sheet at a time. This is a great thing, but not necessarily all the time! Too much can be daunting at times so take advantage of the great comparison sites and where possible let them do the hard work for you.

2. Research - if it has been said it will be on the internet. Ignorance is no longer a justifiable reason for buying the wrong thing. Take the time to research in detail everything that you could possible want to know about

3. Testimonials - don't know anybody that has bought a Balance Sheet? Wrong! If the Balance Sheet is good the internet will let you know. Use the Internet as a friend and get testimonials before you buy.

4. Questions - Got a question about Balance Sheet then search the Forums, FAQ's, Blogs etc. Don't be afraid to ask .....

5. Reputation - Never heard of the company selling Balance Sheet? Don't worry, no reason why you should know every company in the world, but you know someone that does! Use the internet to find out what people are saying about Balance Sheet and build up a picture of their reputation for sales, returns, customer service, delivery etc.

6. Returns - still worried that even after all of the above your Balance Sheet wont be what you want? Check out the returns policy. There is so much competition now that someone, somewhere is bound to offer the terms that you are comfortable with.

7. Feedback - happy with your Balance Sheet then let people know, after all you are depending on others people input in your buying decision, so why not give a little back.

8. Security - check for the yellow padlock on the Balance Sheet site before you buy, and the s after http:/ /i.e. https:// = a secure site

9. Contact - got a question about Balance Sheet, or want to leave a comment then check out the sites contact page. Reputable companies have them and respond.

10. Payment - ready to pay for your Balance Sheet, then use your credit card or PayPal! Be aware of companies that don't accept them, there may be genuine reasons but given the huge amount of choice you have when buying online there is no reason at all not to buy via credit card or PayPal.

In accountancy, a balance sheet is a statement of the carrying value of all of the assets and liabilities (including equity) of a business or other organization or person at a particular date, such as the end of a financial year. It is known as a balance sheet because it reflects an accounting identity: the components of the balance sheet must (by definition) be equal, or in balance; in the most basic formulation, assets must equal liabilities and net worth, or equivalently, net worth must equal assets minus liabilities (see the accounting equation).

A balance sheet is often described as a "snapshot" of the company's financial condition on a given date. Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time, instead of a period of time.

A simple business operating entirely in cash could measure its profits by simply withdrawing the entire bank balance at the end of the period, plus any cash in hand. However, real businesses are not paid immediately; they build up inventories of goods to sell and they acquire buildings and equipment. In other words: businesses have assets and so they could not, even if they wanted to, immediately turn these into cash at the end of each period. Real businesses also owe money to suppliers and to tax authorities, and the proprietors do not withdraw all their original capital and profits at the end of each period. In other words businesses also have liability.

A modern balance sheet usually has three parts: assets, liabilities and shareholders' equity. The main categories of assets are usually listed first and are followed by the liabilities. The difference between the assets and the liabilities is known as the 'net assets' or the 'net worth' of the company.

The net assets shown by the balance sheet equals the third part of the balance sheet, which is known as the shareholders' equity. Formally, shareholders' equity is part of the company's liabilities: they are funds "owing" to shareholders (after payment of all other liabilities); usually, however, "liabilities" is used in the more restrictive sense of liabilities excluding shareholders' equity. The balance of assets and liabilities (including shareholders' equity) is not a coincidence. Records of the values of each account in the balance sheet are maintained using a system of accounting known as double-entry bookkeeping. In this sense, shareholders' equity by construction must equal assets minus liabilities, and are a residual (mathematics).

Balance sheet structure A balance sheet summarizes an organization or individual's assets, equity and liabilities at a specific point in time. Individuals and small businesses tend to have simple balance sheets Personal balance sheet structure US Small Business Administration sample spreadsheet for a small business. Larger businesses tend to have more complex balance sheets, and these are presented in the organization's annual report. Microsoft Corporation balance sheet, June 30, 2004 Large businesses also may prepare balance sheets for segments of their businesses. International Business Machines "Global Financing" balance sheet comparing 2003 to 2004 A balance sheet often compares two balance sheets for a single organization. Balance sheet comparing two year-end balance sheets Balance sheet comparing monthly balances

Guidelines for corporate balance sheets are given by the International Accounting Standards Committee and numerous country-specific organizations.

Balance sheet account names and usage depend on the organization's country and the type of organization. Government organizations do not generally follow standards established for individuals or businesses. University of Calgary (Canada) Financial Services balance sheet accounts University of Victoria (Canada) balance sheet accounts University of Minnesota (USA) balance sheet accounts State of Alabama (USA) balance sheet accounts New York State (USA) public utilities balance sheet accounts

If applicable to the business, summary values for the following items should be included on the balance sheet: "Presentation of Financial Statements" International Accounting Standards Board. Accessed 24 June 2007.

Assets
Long-term assets

property, plant and equipment

investment property, such as real estate held for investment purposes

intangible assets

financial assets (excluding investments accounted for using the equity method, accounts receivables, and cash and cash equivalents)

investments accounted for using the equity method

biological assets

Current assets

inventory

accounts receivable

cash and cash equivalents

Liabilities

accounts payable

provision (accounting) for warranties or court decisions

financial liabilities (excluding provisions and accounts payable), such as promissory notes and corporate bonds

liabilities and assets for current tax

deferred tax liabilities and deferred tax assets

minority interest in equity

issued capital and reserve (accounting) attributable to equity holders of the parent company

Equity

numbers of share (finance) authorised, issued and fully paid, and issued but not fully paid

par value of shares

reconciliation of shares outstanding at the beginning and the end of the period

description of rights, preferences, and restrictions of shares

treasury stock, including shares held by subsidiary and associates

shares reserved for issuance under option (finance)s and contracts

a description of the nature and purpose of each reserve within owners' equity

Sample balance sheet structure The following balance sheet structure is just an example. It does not show all possible kinds of assets, equity and liabilities, but it shows the most usual ones. Because it shows Goodwill it could be a Consolidated account balance sheet. Monetary values are not shown, summary (total) rows are missing as well.

'''Balance Sheet of XYZ, Ltd. as of 31 December ['''

'''ASSETS'''

'''[Current asset''' [Cash and cash equivalents [Accounts receivable [Inventory [Prepaid expense Investments held for trading Other current assets

'''Fixed Assets (Non-Current Assets)''' Property, plant and equipment Less : [Accumulated Depreciation [Goodwill [Intangible asset [Associate company [Deferred tax assets

'''LIABILITIES and EQUITY'''

'''Current liabilities''' [Accounts payable Current income tax liabilities Current portion of bank loans payable Short-term [Provision (Accouting) Other current liabilities

'''Long term Liabilities (Fixed Liabilities)''' [Loan [Security (finance) [Deferred tax liability [Provision (Accounting) [Minority interest

'''Equity''' [Share capital Capital [Reserve (Accounting) Revaluation [Reserve (Accounting) Translation [Reserve (Accounting) [Retained earnings

Equity valuation The real value to a purchaser of the business or a shareholder may be different from the net assets shown by the balance sheet. This is because factors that affect the value of a business may not be recorded yet. For example, a purchaser will be interested in the future earnings of the business, whether assets such as property have been revalued recently, and whether there are potential liabilities in the future such as lawsuits. The value of the assets in the balance has also been based on the assumption that the business is a going concern, otherwise the break-up value of the assets may be far less than the value in the balance sheet.

Constructing a balance sheet Case Study

1.1
A new business starts up as a limited liability company called Sunrise Ltd by raising $10,000 from the owners i.e. share holders. The money is put into a new bank account. What would the assets, liabilities and equity be?

'''Assets:''' Bank Balance 10,000 '''Equity & Liabilities:''' Share Capital 10,000

1.2
They then use 6,000 of its bank account to buy a delivery van. Assets and liabilities after this transaction:

'''Assets:''' Bank Balance 4,000 Delivery Van 6,000 '''Equity & Liabilities:''' Share Capital 10,000

1.3
Sunrise Ltd then buys some inventory at 3,000 on credit. Assets and liabilities after this transaction:

'''Assets:''' Bank Balance 4,000 Delivery Van 6,000 Inventory 3,000 '''Liabilities:''' Accounts Payable 3,000 (to be paid to creditors) '''Equity:''' Share Capital 10,000

Total assets must always equal total liabilities (and equity). This is inevitable, as liabilities (and equity) provide the funds that are spent on these assets.

1.4
Shortly afterwards, after selling 1,000 of inventory for 2,500, payment of 2,600 of the accounts payable and the purchase of 2,200 of machinery financed by a 2,200 bank loan, the assets and liabilities change to the following:{| class="wikitable"|-! colspan="2" align="center"|Sunrise Ltd.
Balance Sheet
As of December 31, 2005|-| colspan="2"|Assets|-| colspan="2"| Current assets|-| Bank balance||align="right"|1,400|-| Inventory||align="right"|2,000|-| Accounts receivable||align="right"|2,500|-| Total current assets||align="right"|5,900|-| colspan="2"| Fixed assets|-| Delivery van||align="right"|6,000|-| Machinery||align="right"|2,200|-| Total fixed assets||align="right"|8,200|-| Total assets||align="right"|14,100|-| colspan="2"|Liabilities and stockholders' equity|-| colspan="2"| Current liabilities|-| Accounts payable||align="right"|400|-| colspan="2"| Long-term liabilities|-| Loans payable||align="right"|2,200|-| Total liabilities||align="right"|2,600|-| colspan="2"| Stockholders' equity|-| Share capital||align="right"|10,000|-| Retained earnings||align="right"|1,500|-| Total stockholders' equity (Net worth)||align="right"|11,500|-| Total liabilities and stockholders' equity||align="right"|14,100|}

Points to note:

Must be headed with the name of the reporting entity (e.g., Sunrise Ltd.) and the date.
The van has not been depreciated and there are no other trading expenses.
The terms 'Current Liability' and 'Long-Term Liability' are the traditional names possibly used by sole traders or partnerships. Limited companies may use the phrases 'Liabilities: Amounts falling due within 1 year' and 'Liabilities: Amounts falling due after 1 year'.
The Total Equity may also be called the 'Net Worth'.
The Net Worth is in principle what the company is worth; it shows the monetary amount that would effectively be left if all assets were sold and all liabilities paid off.

See also

Off-balance-sheet
National accounts
Minority interest

References In accountancy, a balance sheet is a statement of the carrying value of all of the assets and liabilities (including equity) of a business or other organization or person at a particular date, such as the end of a financial year. It is known as a balance sheet because it reflects an accounting identity: the components of the balance sheet must (by definition) be equal, or in balance; in the most basic formulation, assets must equal liabilities and net worth, or equivalently, net worth must equal assets minus liabilities (see the accounting equation).

A balance sheet is often described as a "snapshot" of the company's financial condition on a given date. Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time, instead of a period of time.

A simple business operating entirely in cash could measure its profits by simply withdrawing the entire bank balance at the end of the period, plus any cash in hand. However, real businesses are not paid immediately; they build up inventories of goods to sell and they acquire buildings and equipment. In other words: businesses have assets and so they could not, even if they wanted to, immediately turn these into cash at the end of each period. Real businesses also owe money to suppliers and to tax authorities, and the proprietors do not withdraw all their original capital and profits at the end of each period. In other words businesses also have liability.

A modern balance sheet usually has three parts: assets, liabilities and shareholders' equity. The main categories of assets are usually listed first and are followed by the liabilities. The difference between the assets and the liabilities is known as the 'net assets' or the 'net worth' of the company.

The net assets shown by the balance sheet equals the third part of the balance sheet, which is known as the shareholders' equity. Formally, shareholders' equity is part of the company's liabilities: they are funds "owing" to shareholders (after payment of all other liabilities); usually, however, "liabilities" is used in the more restrictive sense of liabilities excluding shareholders' equity. The balance of assets and liabilities (including shareholders' equity) is not a coincidence. Records of the values of each account in the balance sheet are maintained using a system of accounting known as double-entry bookkeeping. In this sense, shareholders' equity by construction must equal assets minus liabilities, and are a residual (mathematics).

Balance sheet structure A balance sheet summarizes an organization or individual's assets, equity and liabilities at a specific point in time. Individuals and small businesses tend to have simple balance sheets Personal balance sheet structure US Small Business Administration sample spreadsheet for a small business. Larger businesses tend to have more complex balance sheets, and these are presented in the organization's annual report. Microsoft Corporation balance sheet, June 30, 2004 Large businesses also may prepare balance sheets for segments of their businesses. International Business Machines "Global Financing" balance sheet comparing 2003 to 2004 A balance sheet often compares two balance sheets for a single organization. Balance sheet comparing two year-end balance sheets Balance sheet comparing monthly balances

Guidelines for corporate balance sheets are given by the International Accounting Standards Committee and numerous country-specific organizations.

Balance sheet account names and usage depend on the organization's country and the type of organization. Government organizations do not generally follow standards established for individuals or businesses. University of Calgary (Canada) Financial Services balance sheet accounts University of Victoria (Canada) balance sheet accounts University of Minnesota (USA) balance sheet accounts State of Alabama (USA) balance sheet accounts New York State (USA) public utilities balance sheet accounts

If applicable to the business, summary values for the following items should be included on the balance sheet: "Presentation of Financial Statements" International Accounting Standards Board. Accessed 24 June 2007.

Assets
Long-term assets