All businesses need to add assets to a balance sheet, and other vital information needs to be recorded on certain statements and forms, before the balance sheet is prepared and after it is prepared. Accounting plays a huge role in each business, in one manner or another. It is very important that all financial information is recorded in a well organized manner. Assets can be property or cash, value that is added to the equity of a business. To add assets to a balance sheet, there are some steps to take to get them all listed. Other things that are listed on this form are owner’s equity and liabilities, and these are usually documented on the final day of the month or year.
- Assets are listed in their own categories. Assets can be cash in the bank, any property the business owns, any monies that are owed to the business, and so on. Other assets can be things like life insurance savings for the future, or another investment that may increase in the future, such as a 401K.
- Cash is always recorded first and followed by accounts receivable, business supplies, prepaid expenses, and any remaining assets.
- When listing assets on the balance sheet, you will list liabilities too, which will be the accounts payable.
- You will need an income statement and the statement of owner’s equity in order to add assets to a balance sheet.
- An income statement is a record of your revenues and expenses.
- A statement of owner’s equity is a record of any changes that occurred with the business owner’s equity.
- After a balance sheet is finished, a statement of cash flows will be filled out. This form shows the cash that flowed in or out of the business, such as business expenses for running the business, investments or financing the company has made.
- At the top of the balance sheet, you will write or type the name of the business. Underneath that, on the next line, it will say “Balance Sheet”. Underneath that, on the next line, it will have the date, written as the name of the month, the last day of the month, a comma and space, and then the year.
- On the left side of the balance sheet, the assets are listed. If you have a template, it should say “Assets” at the top of the left column.
Here is an example of a balance sheet:
Sam’s Soda Machine Repair Service
May 31, 2008
Cash $43,050 Accounts Payable $21,200
Accounts receivable $40,350
Supplies $13,350 Owner’s Equity
Land $70,000 Sam Hillroy, capital $145,550
Total assets $166,750 Total liabilities and owner’s equity $166,750
The totals should follow the accounting equation, which is assets = liabilities + owner’s equity.
Accounts payable: When a purchase is made on account.
Accounts receivable: Money a customer owes.
If you have Microsoft’s newer version of Office 2007, there are free templates for balance sheets, and other things, in the Excel section of the Office program. You can get a free 60-day trial version of this at the Microsoft web site. When a business adds assets to a balance sheet, there is a process that gets them there. Each form and statement helps the business stay organized for their own purposes and in case they are ever audited.