The balance sheet is a snapshot of your business’s financial position at a particular point in time. It shows the value of everything your business owns (assets), the amount it owes to others (liabilities) and the owner’s equity. A good balance sheet should show all assets equaling all liabilities and equity.
The first step in creating a balance sheet is choosing the reporting date and reporting period, which will determine the items reported on. Assets are usually divided into two categories based on their level of liquidity: current assets and noncurrent assets. Current assets are items that can be converted into cash within one year, or one business cycle, and include items such as accounts receivable, short-term investments and inventory. Noncurrent assets are items that cannot be converted into cash within a year, and include primarily long-term assets such as equipment, buildings and trademarks.
Liabilities are listed on the left side of a balance sheet and include any debts or obligations that a company has. They are categorized as current and noncurrent, with current liabilities being those that need to be paid in the next year or so, and noncurrent liabilities being those that need to be paid in more than one year.
The bottom section of a balance sheet typically includes total liabilities and equity, with both of these amounts showing up as positive numbers. A good balance sheet will also include a line item that reconciles these figures to each other by listing the sum of all current liabilities and equity. It will then show how these totals change as a result of changes to the company’s assets and/or liabilities. Bilanz