A balance sheet is a basic financial report that is used by every business. The balance sheet is more or less a snap shot of the current financial state of a company. It lists assets on one portion of the report and liabilities and equity on another portion. While the balance sheet tells nothing of what happened before or what will happen after the balance sheet is created, it does give an accurate representation of a company’s current financial state.
Things You'll Need
- List of Assets
- List of Liabilities
- List of Equity
List all assets on a piece of paper. (A computer and spreadsheet is more ideal) The assets should be listed according to their liquidity. This means current assets (short-term benefit) should be listed first. Calculate the total of all current assets.
List all fix assets (long-term benefit). Calculate the total of all fix assets. Determine the depreciation for all fixed assets and subtract this figure from the total fixed assets. The remaining balance will be your net fixed assets.
Add your total current assets with your total fixed assets to arrive at total assets. This is the figure that should balance with your total liabilities and equity.
List all liabilities according to liquidity. Calculate total liabilities. List all forms of equity. Add total liabilities with total equity to arrive at total liability and equities.
You now have created a balance sheet. If done correctly the total assets should equal the total liabilities and equities.
Tips & Warnings
- Use a program such as Microsoft Excel to create the balance sheet. It is much more professional and is easier to calculate formulas using the program.
- If your total assets and total liabilities and equity don’t equal each other then there is a problem in your calculations. Review the balance sheet and make sure that all figures are correct and that all assets as well as liabilities and equities are listed.