Balance sheet

1

Balance sheet
Accountancy

Key concepts Accountant · Bookkeeping · Cash and accrual basis · Constant Item Purchasing Power Accounting · Cost of goods sold · Debits and credits · Double-entry system · Fair value accounting · FIFO & LIFO · GAAP / International Financial Reporting Standards · General ledger · Historical cost · Matching principle · Revenue recognition · Trial balance Fields of accounting Cost · Financial · Forensic · Fund · Management · Tax Financial statements Balance sheet · Statement of cash flows · Statement of changes in equity · Statement of comprehensive income · Notes · MD&A Auditing Auditor's report · Financial audit · GAAS / ISA · Internal audit · Sarbanes–Oxley Act Professional Accountants ACCA · CA · CGA · CMA · CPA

In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot of a company's financial condition".[1] Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business' calendar year. A standard company balance sheet has three parts: assets, liabilities and ownership equity. The main categories of assets are usually listed first, and typically in order of liquidity.[2] Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.[3] Another way to look at the same equation is that assets equals liabilities plus owner's equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner's money (owner's equity). Balance sheets are usually presented with assets in one section and liabilities and net worth in the other section with the two sections "balancing." Records of the values of each account or line in the balance sheet are usually maintained using a system of accounting known as the double-entry bookkeeping system. A business operating entirely in cash can measure its profits by withdrawing the entire bank balance at the end of the period, plus any cash in hand. However, many businesses are not paid immediately; they build up inventories of goods and they acquire buildings and equipment. In other words: businesses have assets and so they can not, even if they want to, immediately turn these into cash at the end of each period. Often, these businesses 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 liabilities.

and these are presented in the organization's annual report.000 . Sumeria. Louvre.[5] Larger businesses tend to have more complex balance sheets.200 Notes Payable $30. or overdue.[6] Large businesses also may prepare balance sheets for segments of their businesses. long-term assets such as common stock and real estate.[8] [9] Personal balance sheet A personal balance sheet lists current assets such as cash in checking accounts and savings accounts. The publication and audit of the balance sheet was still a rarity in England until the passing of the Bank Charter Act 1844. ca. Securities and real estate values are listed at market value rather than at historical cost or cost basis.[10] US small business balance sheet Sample Small Business Balance Sheet[11] Assets Cash Accounts Receivable Liabilities and Owners' Equity $6. equity and liabilities at a specific point in time.[4] Annual balance sheet written in cuneiform script.000 Accounts Payable Total liabilities Tools and equipment $25. Leiden.[7] A balance sheet is often presented alongside one for a different point in time (typically the previous year) for comparison. it was prepared separately from the major books of account. 1605–08).000 Owners' equity Capital Stock $7. which was submitted to the company's General Meeting on 30 August 1671. Department of Oriental Antiquities. Individuals and small businesses tend to have simple balance sheets.000 $30. current liabilities such as loan debt and mortgage debt due. Although the balance sheet he required every enterprise to prepare every year was based on entries of the ledger. clay.Balance sheet 2 Origin It was the Flemish mathematician Simon Stevin who persuaded merchants to make it a rule to summarize accounts at the end of every year in a chapter entitled Coopmansbouckhouding op de Italiaensche wyse (Dutch: "Commercial Book-keeping in the Italian Way") of his Wisconstighe ghedachtenissen (Dutch: "Mathematical memoirs".600 Liabilities $6. long-term liabilities such as mortgage and other loan debt. 2040 BCE. The oldest semi-public balance sheet recorded was that of the East India Company dated 30 April 1671. Types A balance sheet summarizes an organization or individual's assets. Personal net worth is the difference between an individual's total assets and total liabilities.

[18] Liabilities 1. Property. Cash and cash equivalents Inventories Accounts receivable Prepaid expenses for future services that will be used within a year Non-current assets (Fixed assets) 1. such as apple trees grown to produce apples and sheep raised to produce wool. Accounts payable Provisions for warranties or court decisions Financial liabilities (excluding provisions and accounts payable). and equipment.[12] Public Business Entities balance sheet structure Guidelines for balance sheets of public business entities are given by the International Accounting Standards Committee (now International Accounting Standards Board) and numerous country-specific organizations. and long-term debt. 2. summary values for the following items should be included in the balance sheet:[17] Assets Current assets 1. buildings.800 Total $7. Biological assets. 3. and cash and cash equivalents) 5. 5. Investment property. accrued expenses.800 A really small business balance sheet lists current assets such as cash. and liabilities such as accounts payable. Balance sheet account names and usage depend on the organization's country and the type of organization. plant and equipment 2. 3. which are living plants or animals. 4. intangible assets such as patents. 4. 2. fixed assets such as land. Government organizations do not generally follow standards established for individuals or businesses. and inventory.800 $37. The small business's equity is the difference between total assets and total liabilities. such as promissory notes and corporate bonds Liabilities and assets for current tax Deferred tax liabilities and deferred tax assets Unearned revenue for services paid for by customers but not yet provided . Financial assets (excluding investments accounted for using the equity method. 6. Intangible assets 4. Investments accounted for using the equity method 6. Bearer biological assets are plants or animals which bear agricultural produce for harvest. such as real estate held for investment purposes 3. accounts receivables.[13] [14] [15] [16] If applicable to the business. Contingent liabilities such as warranties are noted in the footnotes to the balance sheet. accounts receivable.Balance sheet 3 Retained Earnings $800 Total owners' equity Total $37.

etc.g. summary (total) rows are missing as well. but it shows the most usual ones. preferences.) Less : Accumulated Amortization Goodwill Other Non-Current Assets. Lease Receivable . As of 31 December 2009 ASSETS Current Assets Cash and Cash Equivalents Accounts Receivable (Debtors) Less : Allowances for Doubtful Accounts Inventories Prepaid Expenses Investment Securities (Held for trading) Other Current Assets Non-Current Assets (Fixed Assets) Property. Balance Sheet of XYZ. it could be a consolidated balance sheet. liabilities and equity. shareholders' equity by construction must equal assets minus liabilities. including shares held by subsidiaries and associates 6. however. Deferred Tax Assets.Balance sheet 4 Equity The net assets shown by the balance sheet equals the third part of the balance sheet. issued and fully paid. Records of the values of each account in the balance sheet are maintained using a system of accounting known as double-entry bookkeeping. Regarding the items in equity section. and are a residual. It comprises: 1. Copyright. Treasury shares. Trademark. 4. the following disclosures are required: 1. Issued capital and reserves attributable to equity holders of the parent company (controlling interest) 2. Shares reserved for issuance under options and contracts 7. In this sense. Monetary values are not shown. 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. shareholders' equity is part of the company's liabilities: they are funds "owing" to shareholders (after payment of all other liabilities). It does not show all possible kinds of assets. e. Because it shows goodwill. The balance of assets and liabilities (including shareholders' equity) is not a coincidence. 2. "liabilities" is used in the more restrictive sense of liabilities excluding shareholders' equity. Numbers of shares authorized. Plant and Equipment (PPE) Less : Accumulated Depreciation Investment Securities (Available for sale/Held-to-maturity) Investments in Associates Intangible Assets (Patent. Ltd. which is known as the shareholders' equity. usually. Non-controlling interest in equity Formally. 3. and restrictions of shares 5. A description of the nature and purpose of each reserve within owners' equity Sample balance sheet The following balance sheet is a very brief example prepared in accordance with IFRS.

 13–14. Pension Obligations Other Non-Current Liabilities. ac. archive. . com/ annualreport/ 2004/ annual/ md_8fc. Corporation Financial Statements. e. com/ fm/ BalanceSheet5-1-04. jpg) [9] "Balance sheet comparing two year-end balance sheets" (http:/ / web. Deposits Non-Current Liabilities (Creditors: amounts falling due after more than one year) Loans Payable Issued Debt Securities. . . Sadao: Early experiences of the British balance sheet. Archived from the original on 2007-07-15. [2] Daniels. Notes/Bonds Payable Deferred Tax Liabilities Provisions. Joseph V. [6] Microsoft Corporation balance sheet. Retrieved 2003-08-10. e. p. e. pp. sba. p. ibm. New York: New York : Arno Press. Retrieved 2010-05-08. org/ taxonomy/ int/ fr/ ifrs/ ci/ 2003-07-15/ ifrs-ci-2003-07-15_files/ image016. archive. Carcello (2008). xbrl. Bettner.g. Lease Obligations SHAREHOLDERS' EQUITY Paid-in Capital Share Capital (Ordinary Shares. Susan F. png). ISBN 0405135149.g. econ. 40. Haka.g. October 1962. 83. gov/ library/ balsheet. shtml) [8] Balance sheet comparing two year-end balance sheets (http:/ / www. ISBN 9780072996500. xls). 2004 (http:/ / www. Preference Shares) Share Premium Less: Treasury Shares Retained Earnings Revaluation Reserve Accumulated Other Comprehensive Income Non-Controlling Interest 5 See also • • • • • Balance sheet substantiation Income statement Cash flow statement Statement of retained earnings (statement of changes in equity) Minority interest • • • • • Model audit National accounts Off-balance-sheet Reformatted balance sheet Sheet References [1] Williams. kyoto-u. Financial & Managerial Accounting. com/ msft/ ar04/ nonflash/ 10k_fr_bs.. 41.Balance sheet LIABILITIES and SHAREHOLDERS' EQUITY LIABILITIES Current Liabilities (Creditors: amounts falling due within one year) Accounts Payable Current Income Tax Payable Current portion of Loans Payable Short-term Provisions Other Current Liabilities. pp. org/ web/ 20071019044218/ http:/ / www. microsoft. Mark S. html) [7] International Business Machines "Global Financing" balance sheet comparing 2003 to 2004 (http:/ / www. Archived from the original on 2007-10-19. Vol.37-38.g. pdf) [5] "US Small Business Administration sample spreadsheet for a small business" (http:/ / web. Mortimer (1980). Unearned Revenue. Kyoto University Economic Review. 44-45 (http:/ / www. McGraw-Hill Irwin. jp/ review/ 10000361. [3] Williams. timberry. org/ web/ 20070715223932/ http:/ / www.50 [4] Takatera. e. Jan R. June 30.

 931. dps. . p. us/ oed/ sbdc/ business/ pbs.. Jermakowicz (2007). gov/ services/ financialassistance/ basics/ statement/ finst_balsheet. org/ web/ 20080307003615/ http:/ / www. fp. finance. ca/ financial/ coa/ balancesheet. .Balance sheet [10] "Personal balance sheet structure" (http:/ / web. ucalgary. al. us/ N/ nycrr16. comptroller. John Wiley & Sons. Eva K. nsf/ Parts/ 763994601AEFFF5A85256FC80060B523?OpenDocument) [17] "Presentation of Financial Statements" (http:/ / www. 6 . co. 50. pdf) [16] New York State (USA) public utilities balance sheet accounts (http:/ / www3. Interpretation and Application of International Financial Reporting Standards. [18] Epstein. archive. archive. org/ web/ 20071119100727/ http:/ / www. [11] Williams. Accessed 24 June 2007. ny. html) [13] "Personal balance sheet structure" (http:/ / web. state. pp. sba. uvic. state. [12] Small Business Administration (http:/ / www. iasplus. Barry J. state. [14] University of Victoria (Canada) balance sheet accounts (http:/ / www. Archived from the original on 2007-11-19. com/ standard/ ias01. pdf). Retrieved 2010-05-08. ISBN 9780471798231. ca/ accounts/ bsvsop. htm) International Accounting Standards Board. shtml) [15] State of Alabama (USA) balance sheet accounts (http:/ / www. Retrieved 2010-05-08. us/ pdfs/ ChartofAccts/ bacc. Archived from the original on 2008-03-07. htm)..

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