How to Create a Balance Sheet

Overview

The balance sheet is a report that shows the company’s assets, liabilities and shareholders equity at any point in time. This report shows a snapshot of the company’s net worth, meaning who they owe, who owes them and what is invested in the company. The balance sheet is presented in two sections to express the following equation:

Assets = Liabilities + Owner’s Equity

The first section of the report presents all the companys assets. The second sections presents all of the liabilities and owner’s equity. This report should be balanced at the end, like the equation. The amount of assets that a company possess should equal the amount of liabilities and owners equity.

Assets

Assets include all of the cash, property and other items that can be converted to cash. The assets section of the balance sheet is split into two categories, current and noncurrent assets.

Current Assets:

• Cash: Checking and savings accounts, petty cash.
• Accounts Receivable: Money owed to the company by a customer or client that is expected to be received within a year.
• Pre-paid expenses: Money paid to suppliers in advance that is expected to be used within a year.
• Inventory: Raw Materials, works in progress and finished goods.
• Marketable securities: Stocks and bonds.

Noncurrent Assets:

• Property: Equipment, land, building, machinery, furniture and fixtures.
• Intangible property: Patents, trademarks, goodwill and copyrights.

Liabilities:

Liabilities include any debts or obligations that the company owes. This section of the balance sheet involves two categories: current and long-term liabilities.

Current Liabilities:

Current Liabilities are classified as debt that is expected to be paid with current assets.

• Accrued Expenses: Wages, employee benefits, and taxes
• Payables: Money owned to vendors and suppliers for goods or services
• Short-term debt: Credit cards, lines of credit
• Unearned Revenue: Revenue from a product or services that has not been delivered or performed yet.

Long-term Liabilities:

• Loans: For a machinery or vehicles.
• Mortgages: Borrowing money for buildings or factories.
• Bonds: Debt issued by the company to raise capital.

Owner's Equity:

This section of the balance sheet presents the amount of owners investment in the company.

Owners Equity includes the following:

• Capital: Money that the owners initially invested into the company.
• Additional paid-in capital: any investment that occurred after the initial capital investment.
• Retained Earnings: Any revenue that was not distributed to owners and kept within the company.

Creating a Balance Sheet in QBO

1.Login to QBO

2.Select "Reports" tab on the left navigation bar.

3.Select "Balance Sheet"

4.Select a time period

• The report will default to "as of the last day of the previous month," if you would like to change the date, use the drop down menu under "Report period" or type in your own date range.

5.Click "Run Report"

This report can be customized to your specific needs by using the “Customize” button in the upper right section of the screen.

Contact us at Exigo if you need help customizing your reports!