Balance Sheet Example

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