Balance Sheet Example

Every business organization is required to furnish and publish its balance sheet at least once in a year. What is a balance sheet? A balance sheet is one of the most important financial statements that a business organization must have. It is basically a report or a declaration of the company's financial standing on that particular date. Though a balance sheet can be prepared as many times as desired, the general practice is to prepare one at the end of the financial year. For more information on what all is included in a balance sheet, you;ll get an example below.

A Balance Sheet: Explained
Before we go on to the sample, let us see what the elements of a balance sheet are and how it helps in bookkeeping and accountancy.

Any normal balance sheet analysis will show you that there are two parts in it. It is the reflection of the company's financial standing, that depicts what it owns and what it owes on a particular date. For this, the basic accounting method of including all items from the income statement is used. Why not just use the income statement? Well, an income statement will reflect only the incomes of the company, after cutting its expenses. The final figure that you get in an income statement does not tell you anything about the company's credit standing. Hence, we need one clear cut statement that will give us a record of both these aspects of the company. Enter, the balance sheet. It has separate sections, clearly defined for the assets owned by the company, the liabilities of the company and the amount of equity that the owners hold in the company. While assets are maintained in a separate section altogether, the liabilities and owners' equity can be taken on one side together. The final result, after taking into account all expenditures, revenues, dividends (expected and received), interests, etc., should be equal on both sides. That means the total on both sides of the balance sheet must tally, in order to prove that the record is true. Hence it can be said that

ASSETS = LIABILITIES + OWNERS' EQUITY
An Example
Given below for your benefit, is a simple example that has almost all the necessary items that need to be included in a standard balance sheet. Go through it, to get an idea of what it looks like.

ABC Ltd. BALANCE SHEET AS ON 31/12/2011
ASSETS (IN $)		LIABILITIES (IN $)
Current Assets		Current Liabilities
Cash	100,000.00	Accounts Payable	900,000.00
Bank	250,000.00	Short Term Debts	450,000.00
Accounts Receivable                    110,000 (-) Reserve for Doubtful Debts      35,000	75,000.00	Long Term debts	2,150,000.00
Investments (short term)	300,000.00	Unpaid Wages and Salaries	600,000.00
Inventory	600,000.00	Warranty Liability	50,000.00
Prepaid Expenses	40,000.00	Interest Payable	170,000.00
		Taxes Payable	630,000.00
Total Current Assets	1,365,000.00	Total Current Liabilities	4,950,000.00
Fixed Assets		Long Term Liabilities
Investments (Long Term)	1,500,000.00	Long Term Loans	3,000,000.00
Land & Building	4,000,000.00	Mortgages	1,000,000.00
Plant and Machinery (equipment) (-) Depreciation	2,000,000.00
Furniture and Fixtures (-) Depreciation	400,000.00
Total Fixed Assets	7,900,000.00	Total Long Term Liabilities	4,000,000.00
Intangible Assets		Share Owners' Equity
Goodwill	300,000.00	Capital Stock	546,000.00
Copyrights	400,000.00	Retained Earnings	78,000.00
Patents	300,000.00	Common Stock	312,000.00
Trademarks	500,000.00	Capital Surplus	723,000.00
		Other Equity	156000.00
Total Intangible Assets	1,500,000.00	Total Share Owners' Equity	1,815,000.00
TOTAL ASSETS	10,765,000.00	TOTAL LIABILITIES	10,765,000.00

You can use this balance sheet example in excel too. All you need to do is copy paste the table into an excel file. Once you have the template, you just need to tweak it a bit, by adding or removing the items according to your needs.

A balance sheet is an important statement, which helps in the financial planning of the company by way of projecting its probable future income and expenditure. It also gives a good idea to prospective investors, clients, creditors and customers about the status of the company in the market, so that they may make the right decision.