A balance sheet is a financial statement that provides a snapshot of a company's financial position at a particular point in time. It shows the company's assets, liabilities, and equity, and it is used to calculate key financial ratios and metrics such as the debt-to-equity ratio and the return on equity.
Here is an example of how a balance sheet might look:
ABC Inc.
Balance Sheet
As of December 31, 2020
ASSETS
Current assets:
Cash $100,000
Accounts receivable $200,000
Inventory $150,000
Total current assets $450,000
Non-current assets:
Property, plant, and equipment $1,000,000
Intangible assets $250,000
Total non-current assets $1,250,000
Total assets $1,700,000
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $100,000
Accrued expenses $75,000
Total current liabilities $175,000
Non-current liabilities:
Long-term debt $500,000
Total non-current liabilities $500,000
Total liabilities $675,000
Equity:
Common stock $500,000
Retained earnings $525,000
Total equity $1,025,000
Total liabilities and equity $1,700,000
In this example, ABC Inc. has total assets of $1,700,000, including $450,000 in current assets and $1,250,000 in non-current assets. It also has total liabilities of $675,000, including $175,000 in current liabilities and $500,000 in non-current liabilities. Finally, it has total equity of $1,025,000, including $500,000 in common stock and $525,000 in retained earnings.
The balance sheet provides a snapshot of a company's financial position at a particular point in time, and it can be used to calculate key financial ratios and metrics that provide insight into the company's financial health and performance.
What is Finanshels?Setting up a good small-business bookkeeping system can be an involved process, especially if you’re not an experienced bookkeeper. Rather than spending enormous time and effort on getting your books up and running, consider turning to Finanshels for help. We’ll set up your bookkeeping system to ensure that your business is starting off right – and we’ll save you a huge amount of stress.Want someone to help you organize your bookkeeping system? Try Finanshels