Balance Sheet Example

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Balance Sheet

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, 20XX
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, 20XX
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 separate assets and liabilities into long-term and short-term categories and include entries for accumulated depreciation and allowance for doubtful accounts.

For professionally created examples of balance sheets for corporations and sole proprietorships, we recommend The Master Set of 80 Business Forms. The set includes filled-in forms designed to give you a complete understanding of how each form works as well as blank forms for use in your own business or for practicing balance sheet preparation.

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Accounting explained in a clear and easy to understand way. Includes explanations for 31 accounting topics, 16 Accounting Exams (40 questions each), 52 Printable Crossword Puzzles, 175 Question Bookkeeping Test, Quick View Basic Accounting "Cheat Sheet", Accounting Dictionary and more. Click here to view more details

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Resources for Balance Sheets

Socrates Forms
Balance Sheet

Prepare a balance sheet at the end of each quarter to reconcile your company's assets against its liabilities and provide a statement on the total net worth of your business.