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Balance Sheet Example

Balance Sheet Example

A balance sheet is an important statement which helps in the financial planning of the company by way of projecting its probable future income and expenditure. It also gives a good idea to prospective investors, clients, creditors and customers about the status of the company in the market, so that they may make the right decision.
Sujata Iyer
A balance sheet is the reflection of the company's financial standing, that depicts what it owns and what it owes on a particular date. For this, the basic accounting method of including all items from the income statement is used. Why not just use the income statement? An income statement will reflect only the incomes of the company, after cutting its expenses. The final figure that you get in an income statement does not tell you anything about the company's credit standing. Hence, we need one clear-cut statement that will give us a record of both these aspects of the company. Enter, the balance sheet. It has separate sections, clearly defined for the assets owned by the company, the liabilities of the company and the amount of equity that the owners hold in the company. While assets are maintained in a separate section altogether, the liabilities and owners' equity can be taken on one side together. The final result, after taking into account all expenditures, revenues, dividends (expected and received), interests, etc., should be equal on both sides. That means the total on both sides of the balance sheet must tally, in order to prove that the record is true. Hence it can be said that

ASSETS = LIABILITIES + OWNERS' EQUITY

Given below for your benefit, is a simple example that has almost all the necessary items that need to be included in a standard balance sheet.
ABC Ltd.
BALANCE SHEET AS ON 31/12/2011
ASSETS (IN $) LIABILITIES (IN $)
Current Assets Current Liabilities
Cash 100,000 Accounts Payable 900,000
Bank 250,000 Short Term Debts 450,000
Accounts Receivable 110,000
(-) Reserve for Doubtful Debts 35,000
75,000 Long Term debts 2,150,000
Investments (short term) 300,000 Unpaid Wages and Salaries 600,000
Inventory 600,000 Warranty Liability 50,000
Prepaid Expenses 40,000 Interest Payable 170,000
Taxes Payable 630,000
Total Current Assets 1,365,000 Total Current Liabilities 4,950,000
Fixed Assets Long Term Liabilities
Investments (Long Term) 1,500,000 Long Term Loans 3,000,000
Land & Building 4,000,000 Mortgages 1,000,000
Plant and Machinery (equipment)
(-) Depreciation
2,000,000
Furniture and Fixtures
(-) Depreciation
400,000
Total Fixed Assets 7,900,000 Total Long Term Liabilities 4,000,000
Intangible Assets Share Owners' Equity
Goodwill 300,000 Capital Stock 546,000
Copyrights 400,000 Retained Earnings 78,000
Patents 300,000 Common Stock 312,000
Trademarks 500,000 Capital Surplus 723,000
Other Equity 156000
Total Intangible Assets 1,500,000 Total Share Owners' Equity 1,815,000
TOTAL 10,765,000 TOTAL 10,765,000