The Purpose of balance sheet is to show the financial position of a given business entity at a specific date. Every business prepares a balance sheet at the end of the year. Most companies prepare one at the end of each month. A balance sheet consists of a listing of the assets, the liabilities and the owner’s equity of a business. A balance sheet is most useful if it is relatively recent. The following
balance sheet example
shows the financial position of a Moon Travel Agency at December 31, 2011.
Moon Travel Agency
Balance Sheet.
December 31, 2011.
Assets. Liabilities & Owner Equity.
Cash…………………………………22,500. Notes Payable……………………..41,000.
Notes Receivable…………………10,000. Accounts Payable…………………36,000.
Accounts Receivable……………..60,500. Salaries Payable……………………3,000.
Supplies………………………………2,000. Total Liabilities…………………….80,000.
Land……………………………….100,000. Owner’s Equity.
Building……………………………..90,000. Maya crane, Capital………………20,000.
Office Equipment………………….15,000.
Total……………………………….300,000. Total………………………………..300,000.
Let us briefly describe several feature of this balance sheet example. First the heading sets for three things.
1. The name of the Business entity.
2. The name of the financial statement.
3. The balance sheet date.
The body of the balance sheet also consists of three distinct sections: assets, liabilities, and owner’s equity. As we see in above. balance sheet example
Notice that cash is listed first among the assets, followed by notes receivable, account receivable, supplies and any other assets that will soon be converted into cash or consumed in business operations.
Following these relatively “liquid” assets are the most “permanent” assets, such as land, buildings and equipment’s. Liabilities are shown before owner’s equity. Each major type of liability (such as notes payable, accounts payable and salaries payable) is listed separately, followed by a figure of total liabilities in the above balance sheet example
Finally, notice that in the above balance sheet example the amount of total assets (30,000) is equal to the total amount of liabilities and owner’s equity (also 300,000). This relationship always exists- in fact; the equality of these totals is one reason that this financial statement is called a balance sheet.
balance sheet example
shows the financial position of a Moon Travel Agency at December 31, 2011.
Moon Travel Agency
Balance Sheet.
December 31, 2011.
Assets. Liabilities & Owner Equity.
Cash…………………………………22,500. Notes Payable……………………..41,000.
Notes Receivable…………………10,000. Accounts Payable…………………36,000.
Accounts Receivable……………..60,500. Salaries Payable……………………3,000.
Supplies………………………………2,000. Total Liabilities…………………….80,000.
Land……………………………….100,000. Owner’s Equity.
Building……………………………..90,000. Maya crane, Capital………………20,000.
Office Equipment………………….15,000.
Total……………………………….300,000. Total………………………………..300,000.
Let us briefly describe several feature of this balance sheet example. First the heading sets for three things.
1. The name of the Business entity.
2. The name of the financial statement.
3. The balance sheet date.
The body of the balance sheet also consists of three distinct sections: assets, liabilities, and owner’s equity. As we see in above. balance sheet example
Notice that cash is listed first among the assets, followed by notes receivable, account receivable, supplies and any other assets that will soon be converted into cash or consumed in business operations.
Following these relatively “liquid” assets are the most “permanent” assets, such as land, buildings and equipment’s. Liabilities are shown before owner’s equity. Each major type of liability (such as notes payable, accounts payable and salaries payable) is listed separately, followed by a figure of total liabilities in the above balance sheet example
Finally, notice that in the above balance sheet example the amount of total assets (30,000) is equal to the total amount of liabilities and owner’s equity (also 300,000). This relationship always exists- in fact; the equality of these totals is one reason that this financial statement is called a balance sheet.
