Making Balance Sheets for Investment Accounts
Balance sheets are financial statements of the liabilities and assets of an account at a single, static moment of time throughout the year. Businesses use balance sheets to better understand their financial outlook . Consumers can use balance sheets as well, to understand how the market is affecting their portfolio and to prepare for tax season. Implementing a tried and true accounting process will help the financial stability of your investment account and can provide the information needed to avoid large-scale tax blunders.
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Instructions
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Calculate liabilities for the investments. These are any funds owed on the investments themselves, whether they be commissions or fees. For accounting purposes, these are also broken down into two categories: short term liabilities, which are due within a year, and long term liabilities, which are due beyond one year. You need not make this distinction in a personal investment account balance sheet however.
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Determine the equity or amount of your ownership interest of the account. This can be determined by adding the total money invested plus retained earnings. Add this number to the above calculated liabilities.
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Calculate current assets, or items owned, and non-current assets. Current assets are convertible into cash in one year while while non-current assets are more of a permanent nature. In an investment account your assets are the investments and can all be considered non-current.
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Organize the balance sheet in a horizontal fashion with liabilities and equity totaled on the left side, and current Assets totaled on the right. Both sides should equal out and give you a snapshot of the financial situation of the investment account for one specific day in a fiscal year.
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Tips & Warnings
Many online investment firms now provide balance sheets for their customers accounts which can quickly and easily be pulled off of the web.
Consult your financial professional for advice on preparing financial statements associated with you investment accounts.
