how to create a balance sheet?
how to create a balance sheet?
Purpose of the balance sheet
A balance sheet is a statement that shows the assets, liabilities, and shareholders’ equity of the firm on a particular date also known as the reporting date. Thus, the reporting date is usually the final date of the reporting period and helps to ascertain the financial position of the company as on date.
Most companies report their results on a quarterly basis and have the last day of the quarter as the reporting data.
The companies either report their results on a fiscal or retail calendar basis.
Determine the assets
Tally all the asset items in the balance sheet.
Usually, in a balance sheet, the assets are shown in two ways, first is splitting them based on Current(short term) vs Non-current (long-term) assets and then further bifurcating them into each asset individually. This is to provide a clear picture to the analysts about each of the asset's individual contribution to the total.
Assets are written as the following in the balance sheet line items:
Current Assets:
Cash and cash equivalents
Short-term marketable securities
Accounts receivable
Inventory
Other current assets
Noncurrent Assets:
Long-term marketable securities
Property
Goodwill
Intangible assets
Other noncurrent assets
Both the current assets and the non-current assets should be first sub-totaled and then totaled together
Determine the liabilities
Similar to the assets, liabilities are also shown in two ways, first is splitting them based on Current(short term) vs Non-current (long-term) liabilities and then further bifurcating them into each individually.
Current Liabilities:
Accounts payable
Deferred revenue
Current portion of long-term debt
Commercial paper
Accrued expenses
Other Current Liabilities
Noncurrent Liabilities:
Deferred revenue (noncurrent)
Long-term lease obligations
Long-term debt
Other noncurrent liabilities
Similar to the assets, the liabilities are also totaled along with the line items.
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