How To Read A Balance Sheet?

What Is A Balance Sheet?

A Balance Sheet is an overview of how your business is performing financially at any given time period.  It is prepared in one of two different ways. 

The first way is by using a General Ledger.  

The General Ledger is data from the Income Statement and the Cash Flow Statement (Projection).  This is used if your company uses the double entry accounting method.  The other way of preparing a balance sheet is to include the assets, liabilities and the equities directly into your Balance Sheet.

Why Is A Balance Sheet Important?

A Balance Sheet is important because it is a total snap shot of your business financial condition at any given time period.  The financial condition of your business can change day to day, month to month, year to year etc.  You can look at it at any given time period and calculate the exact condition of your business at that specific time period.

How To Read A Balance Sheet?

The Balance Sheet is broken down into three main sections, the Title, the Assets and the Liabilities, the Equities should be included in the Liabilities section.

The Title section is the first section and it includes the company name, the title of the form which is the “Balance Sheet” and the period of time this Balance Sheet is for.

The next section is the Asset section.  The Assets are the items your business has ownership of, this includes items like accounts receivable, inventory, equipment, petty cash, cash at hand, furniture, and so on.  All of your assets are in this section.

The final section is the Liabilities section.  The Liabilities are the items your business owe, this includes items like, accounts payable, notes payable, loans payable, taxes payable, payroll accrual and so son.  All of the liabilities are listed in this section.

How Is The Balance Sheet Calculated? 

Assets = Liabilities + Equities

All of the assets should be calculated, then all of the liabilities and the equities, if the assets are more then the liabilities and equities.  Your Balance Sheet will have a Net Profit.  But on the other hand if the liabilities and equalities are more then the assets you will have a Net loss.

Download Our Financial Statement E-book  that include sample;

Income Statements

Balance Sheet Statements

Cash Flow Statements 

Balance Sheet Template 1

Balance Sheet Template 2

Read A Balance Sheet Help...

Balance Sheet Example
Your Balance Sheet Example is a quick view of the financial state of your business at a specific time period.

Balance Sheet Template
Your Balance Sheet Template is a printable Template that shows you the basics to doing a Balance Sheet for your business.

Sample Balance Sheet
A Sample Balance Sheet will help you write a Balance Sheet for your business. It will show you how to know the difference between Your companies Assets and its Liabilities.

Read A Balance Sheet
Find details about how to read a balance sheet.  Also find details about what is in a balance sheet and the three main sections in them and how you calculate them.

Balance Sheet Accounts
Locate information about using balance sheet accounts and how they can be very useful to running your business.  also find details about assets, liabilities and owner's equity.

Balance Sheet Analysis
Learn how to balance sheet analysis can help you with your business.  Also find information about assets, liabilities and owner's equity and how you can understand your business finances better.

Balance Sheet Definition
Understand how a balance sheet definition can help you to define you businesses finances.  Also learn how you will be able to understand a balance sheet better so that you can organize your business finances.

Prepare A Balance Sheet.
Review details about what it takes to prepare a balance sheet for your business.  Also understand the steps preparing your balance sheet.  And how to understand the assets, liabilities and the owner's equities.