A balance sheet is a snapshot of what a business owns (assets) and owes (liabilities) at a specific point in time.
It is made up of the following three sections:
- assets – including cash, stock, equipment, money owed to business, goodwill
- liabilities – including loans, credit card debts, tax liabilities, money owed to suppliers
- owner’s equity – the amount left after liabilities are deducted from assets
Example of a balance sheet
| ASSETS | |||
| Current Assets | |||
| Cash | $ | 20,000 | |
| Accounts receivable | $ | 15,000 | |
| Inventory | $ | 150,000 | |
| Total Current Assets | $ | 185,000 | |
| Non-Current Assets | |||
| Plant and equipment | $ | 50,000 | |
| Business premises | $ | 650,000 | |
| Vehicles | $ | 70,000 | |
| Total Non-Current Assets | $ | 770,000 | |
| TOTAL ASSETS | $ | 955,000 | |
| Current Liabilities | |||
| Accounts payable | $ | 25,000 | |
| Bank overdraft | $ | 10,000 | |
| Credit card debt | $ | 5,000 | |
| Tax liability | $ | 30,000 | |
| Total Current Liabilities | $ | 70,000 | |
| Non-Current Liabilities | |||
| Long term business loan 1 | $ | 450,000 | |
| Long term business loan 2 | $ | 50,000 | |
| Total Non-Current Liabilities | $ | 500,000 | |
| TOTAL LIABILITIES | $ | 570,000 | |
| NET ASSETS | $ | 385,000 | |
| OWNERS EQUITY | $ | 385,000 | |
