Balance Sheet Example


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Simple Balance Sheet Example

balance sheet example
balance sheet example

Most if not all balance sheets are made for one purpose, and yours will be the same. Your balance sheet example is there so you can classify your company’s assets and liabilities into distinct groups such as Current Assets, Current Liabilities, Long-term Assets, and Property, etc. The classifications make the balance sheet much more useful to the company overall.

The balance sheet or statement can be prepared in two different formats. An account form and a report form. And if you are not familiar with both no worries. We are going to give you a rundown on both. Let’s talk about the account form first; it consists of two columns. The assets are in the left column of the report whereas the liabilities and equity on the right.

You will understand it much better if you think of it like debits and credits. The debt accounts are on the left, and the credit accounts are on the right.

Now we move on to the report form. The report form only has one column. The report form is more traditional format when it comes to reports issued by companies. You always showcase the Assets following the liabilities and lastly the equity.

In both formats, you have to categorize the company’s assets into “Current Assets” and “Long-term Assets.”

If you don’t know what difference between the two assets are we have covered that topic here in another article. But for a reminder, current assets consist of funds that will be used at the time of one year, whereas any assets passing the one year mark is said to be a long-term asset. Similarly, you will separate Liabilities into current and long-term categories.

Also, Read 

Top Errors People Make When Making A Balance Sheet

Asset Section

balance sheet example

Now we are going to be talking a bit more about what you do in the subdivisions of the classified balance sheet example. Like an accounting equation, you list all the assets first. After you’ve done that you will have to categorize your assets as current or long-term. Also, you will break down the assets into two or more subcategories.

Following this construct helps the investors see what kind of assets your company is investing in, what types are being sold, and which remained unaffected. Let’s talk a bit more about the subcategories; the first subcategory is current assets in order of their liquidity. Here’s an example of what you will get when making this list:

  • Cash
  • Current
  • Inventory
  • Prepaid Expenses
  • Due to Affiliates
  • Accounts Receivable

Secondly, we have the long-term assets subcategory. The following section is different from the previous one as long-term assets tend to belittle over time. And so, the assets are usually listed after a total accumulated depreciation amount is subtracted from them. Here’s a list of some of the most common long-term accounts:

  • Vehicles
  • Buildings
  • Equipment
  • Leasehold Improvements
  • Long-term Notes Receivable

A lot of times, you’ll have to make another subcategory for things that don’t fit into the first two such as investments, property or intangible assets. Here are some examples of such:

  • Other
  • Goodwill
  • Trademarks
  • Investments
  • Mineral Rights

The historical cost principle states that the balance sheet should contain the purchase price of all assets with exception to some intangible assets. In other words, all assets are listed on the balance sheet for the price the company paid for them whenever the purchase was made.

However, doing so can create quite an inconsistency between what is listed on the balance sheet and the actual market value of the said resource. For instance, a building that was purchased in 1965 for $34,000 could be worth $5,000,000 today, but it will be listed for $34,000 on the balance sheet. This is constant with the balance sheet definition that states the report should record events rather than hypothetical numbers.

Liabilities Section:

balance sheet example

Liabilities will also be reported in multiple subcategories just as the assets. There are typically a couple of different liability subdivisions in the liabilities section namely:

  • Current,
  • Long-Term,
  • And Owner Debt.

Always put in the current liabilities section first on your balance sheets. This subdivision includes debt and other duties that will become due in the present. Things such as trade debt and short-term loans come under this category, but it can embrace the portion of long-term investments if they are due within a year or so. Always enlist the current debts by due dates. Here’s a list of common current liabilities in order of how they should appear:

  • Accounts Payable
  • Accrued Expenses
  • Unearned Revenue
  • Lines of Credit
  • Current Portion of Long-term Debt

The Second liabilities section is a lists the all the obligations that will become due in more than a year hence long-term. Usually, all the long-term liabilities are merely gathered into one over-all list, but it can be listed in detail, for examples:

  • Notes Payable
  • Loans Payable
  • Mortgage Payable

Equity Section:

balance sheet example

One thing to note about the equity section is that it changes depending on the type of entity. For example,

Corporations go for listing:

  • Common Stock,
  • Preferred Stock,
  • Retained Earnings, And Treasury Stock.

Whereas Partnerships list:

  • The members’ capital

And as for Sole proprietorships, they list:

  • The owner’s capital.

And finally, like all reports, your balance sheet example needs a heading that display’s the business name. Below that, you put the title of the statement and the date.

The following balance sheet example shows the financial position of a Moon Travel Agency at December 31, 2017

Moon Travel Agency
Balance Sheet.
December 31, 2017.

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.

For Balance Sheet Template

Let us briefly describe several features of this

Example of a Balance Sheet.

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 the above accounting 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. Liabilities are shown before the 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.

Finally, notice that in the above-classified 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.


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