Balance Sheet


About the balance sheet report


The balance sheet shows the financial position of a business at a specific point in time, for example, the last day of the month or the year. More on dates

Business owners use this report to see the company’s financial health by looking at the “accounting equation,” which is the backbone of the double-entry accounting system. The accounting equation is defined as:

Assets = Liabilities + Equity

Assets are what you own.  Liabilities are what you owe.  Equity is your investment in the company.

The total assets include current assets, other current assets, fixed assets, and other assets. The total liabilities include current liabilities, other current liabilities, long-term liabilities. The total equity includes all equity accounts. The total assets must equal the combined value of your total liabilities plus owner's equity—that’s why it is called a “balance” sheet.

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Viewing Your Balance Sheet Report


To view your Balance Sheet:

  1. Click the Reports tab.

  2. Under Financial Reports, click Balance Sheet.

  3. In the Report balances as of drop down menu, choose the ending date for the time period you want to show in the report. The report will show balances up to and including the date you specify. Or, select a specific date from the calendar. More on dates

  1. From the Report Format drop down menu, choose the report output option.

  • To view the report on screen, select On Screen Display

  • To print a summary version of the report, select PDF Summary

  • To print a detailed version of the report, select PDF Detail

  • To export the report to Microsoft® Excel, select Excel (XLS) Detail

  • To export the report to Open Office, select Open Office (XML) Detail

  1. Click Run Report.


When you see the report on the screen, you can:

  • Click Show All Accounts to expand the report to show all of your accounts and subaccounts, or click the [+] icon to expand a particular account.

  • Click Hide All Accounts to collapse the report to show only the account categories and subcategories, or click the [-] icon to collapse a particular account.

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Reading the Balance Sheet

The Balance Sheet can be your company's most important decision-making tool. The balance sheet report conforms to the standard accounting format by showing all of a company's assets, all the liabilities, and the owner's equity.  Because the balance sheet uses a standard format, you can consistently compare your company's financial position from one quarter to another, or compare your company's balance sheet with another's.

The Assets section is meant to show you the total worth of all your company's property or assets. The total of all of your company's assets appears at the top of the Assets section. In the Assets section of the report, all of your assets are listed in order of liquidity (which means how quickly that asset could be turned into cash, if need be).  The assets that can be turned into cash the quickest are listed first, such as a bank or savings account. Fixed assets, such as a vehicle or equipment, appear farther down in the Assets section.

Current assets include assets that can be turned into cash within one year. These assets include your cash accounts, accounts receivable, inventory, and other current assets, such as pre-paid expenses. Pre-paid expenses are considered "current" because they represent goods or services you've already paid for, but not yet used.  

Fixed assets include things like vehicles, equipment, office furniture, building improvements, and real estate.

Other assets include things like life insurance and royalties.


Liabilities & Equity section:

The Liabilities & Equity section is divided into Liabilities and then Equity. The Liabilities section is meant to show you the total of your company's debts, both current and long-term. The total of all of your company's liabilities appears at the top of the Liabilities section. In the Liabilities section of the report, all of your debts are listed in the order they must be repaid. The debts that are usually paid first appear at the top of the list, such as accounts payable, which usually must be paid within 30 days.  Current liabilities are next and include debts that are typically paid within a year. Finally, Long-term liabilities are listed, such as loans and mortgages, which may be due in a year or more.  


The Equity section shows you the investment you put into your company and retained earnings you have accumulated. The formula to calculate your equity is:

Total Assets - Total Liabilities = Your Equity

How can you use the balance sheet?

You can use the figures in the balance sheet to see if you are making or losing money and if your company is financially strong.

Working Capital

Your "working capital" tells you if you are making or losing money. Lenders often use "working capital" to evaluate whether a company can last during economic downturns. Your working capital should be positive. The formula to calculate your working capital is:

Total Current Assets - Total Current Liabilities = Working Capital

Current Ratio

Another formula you can use to tell the financial health of your business is "current ratio."  This is the ratio of your total current assets and total current liabilities. It helps answer the question: can you pay for your current liabilities using your current assets?  If the ratio is 2 and above, your business is financially healthy.  The formula to calculate the current ratio is:

Total Current Assets divided by Total Current Liabilities = Current Ratio

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About dates in balance sheet reports 

Date range:

What it shows:

Today

Balances as of today’s date, including today

Last Week

Balances as of the end of Sunday of last week

Last Month

Balances as of the end of the last day of the previous month

Last Quarter

Balances as of the end of the last day of last quarter

Last Fiscal Year

Balances at the end of last fiscal year

Custom

Balances as of the end of the day you select

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