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Balance Sheet Template

The balance sheet is a very important financial statement that summarizes a company’s assets (what it owns) and liabilities (what it owes). A balance sheet is used to gain insight into the financial strength of a company. You can also see how the company resources are distributed and compare the information with similar companies.

No balance sheet statement is complete (in my opinion) without an income statement to go along with it. As a small business owner, I find the income statement to be more useful in the general operation of the business, but the balance sheet is still a critical accounting tool that provides a key piece of information.

The balance sheet informs company owners about the net worth of the company at a specific point in time. This is done by subtracting the total liabilities from the total assets to calculate the owner’s equity, also known as shareholder’s equity (for corporations) or simply the net worth.

Balance Sheet

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License: Private Use (not for distribution or resale)

«No installation, no macros — just a simple spreadsheet» — by Jon Wittwer

Description

Download our free Balance Sheet template, designed for the small-business owner. It includes common financial ratios and works well for a two-year comparison. See below for more information on the different asset and liability categories.

Balance Sheet Essentials

The Accounting Equation: Assets = Liabilities + Owner’s Equity

Current Assets

The term current in a balance sheet generally means «short-term» which is usually one year or less. Common current assets includes cash (cash, coin, balances in checking and savings accounts), accounts receivable (amounts owed to your business by your customers usually within 10-60 days), inventory (goods for sale), and prepaid expenses (e.g. insurance and rent).

Long-Term Assets

These assets include long-term investments, cost of property and equipment (e.g. land, buildings, equipment, tools, furniture, computers, vehicles, etc.) offset by accumulated depreciation, intangible assets (e.g. patents, contracts, trademarks, copyrights, and goodwill), and other assets (like deferred income tax arising from the loss of value of property that cannot be reported as a tax deduction until the property is sold).

Current Liabilities

These include the obligations to be paid within one year, including accounts payable, short-term loans, income taxes payable, wages, unearned revenue (e.g. service contracts), and the current portion of long-term debt (e.g. mortgage payments payable within 12 months).

Long-Term Liabilities

These include long-term debt (e.g. notes, mortgages), capital lease obligations (e.g. leases structured as loans), and deferred income tax (e.g. the tax due on the increase in value of an investment security that isn’t paid until the security is sold).

Owner’s Equity (or Stockholders’ Equity for corporations)

This is basically the amount left over when you subtract Total Liabilities from Total Assets. In includes the owner’s investment(s) and retained earnings (the portion of the profits reinvested in the business). For corporations, there are usually more categories (see the references below).

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Download Balance Sheet Excel Template

Balance Sheet Template is a ready-to-use template in Excel, Google Sheets, and OpenOffice that helps you to gain insights into the financial strengths of the company.

Moreover, this Balance sheet template gives you a snapshot of your financial position at a specific time. Usually, the businesses prepare a Balance Sheet quarterly, half-yearly, or yearly.

Table of Contents

What Is Balance Sheet?

Balance Sheet is a financial statement of a company. It shows the assets, liabilities, equity capital, total debt, etc. at a given point of time.

In simple terms, a balance sheet shows:

• What your business owns. (Assets)
• What it owes. (Liabilities)
• What money is left for the owner? (Owner’s Equity)

For the balance sheet to reflect the true picture, both heads (liabilities & assets) should tally.

Thus, Assets = Liabilities + Equity.

Components of a Balance Sheet

There are two major components of a balance sheet: Assets and Liabilities.

Assets

Assets are the resources or things that your company owns. It consists of two categories: Current Assets and Long-term Assets. An asset is anything tangible or intangible that you own or hold and has a positive economic value.

Current Assets include the following items:

• Cash
• Accounts Receivable
• Stock/Inventory
• Prepaid Expenses
• Short-Term Investments

Long Term Assets include the following:

• Long-term Investments
• Property, Land, and Equipment. Accumulated Depreciation of all will be deducted from these assets.
• Intangible Assets

Other items include Deferred Income Tax.

Liabilities

Liabilities on are debts or obligations to be paid by a company. It is the amount that the company owes to its creditors.

Liabilities consist of 3 parts: Current Liabilities, Long-term liabilities, and Owner’s Equity.

Current Liabilities include the following:

• Short-term Loans
• Income Taxes Payable
• Accrued Salaries and Wages
• Unearned Revenue
• Current Portion of Long-term Loans

Long-term Liabilities include:

• Long-term Debt/Loans
• Deferred Income Tax

Liabilities include all payments to be made by your company. Therefore, any payable loans, accounts payable, unpaid credit card bills, or unpaid taxes must be included.

Owner’s Equity

Another very important head in the balance sheet is the owner’s equity. Your assets should be equal to total liabilities and owners’ equity.

We use the term Owner’s equity when the company is a sole proprietorship. Shareholder’s equity is used when it is a corporation.

In simple terms, the Owner’s Equity is the claim on the assets of a business. Those Assets which remain after deducting liabilities.

Eventually, Equity includes opening investments, contributions, owner’s capital, or retained earnings.

Thus, Equity = Assets – Liabilities.

Owner’s Equity includes:

• Owner’s Investment
• Retained Earnings

Balance Sheet Template

We have created a Balance Sheet Template that summarizes the company’s assets, liabilities, and equity. This will give your lender or investors an idea of the health of the company.

This template can be helpful to Accounts Assistants, Accountants, and Auditors, etc.

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Let’s discuss the contents of the Balance Sheet Template.

Contents of Balance Sheet Template

This template has 3 sections: Asset, Liabilities, and Owner’s Equity. Owner’s Equity is a part of Liabilities and hence falls under the liabilities section.

Let’s understand what items we will be included in each section.

Asset

Insert the following items:

Cash on hand: All Cash including cash in hand + money in the bank.

Accounts Receivable: Receivable includes the total of your outstanding invoices. This does not include any invoices that are still in “draft” status.

Stock Inventory: Stock Inventory that your company holds for the ultimate purpose of resale. Sold items will not include in the Inventory.

Machinery or Equipment: Any Equipment/tangible items purchased for business usage. This equipment will not be bought for reselling.

Reimbursable expenses: Any reimbursable expenses that are already paid and will be reimbursed by another party.

You can customize the Assets section according to your needs.

Liabilities

Liabilities and Owner’s Equity

Insert the following items:

Accounts Payable: This includes money that you owe to other parties other than loans. An example of this would be any unpaid invoice for any service. It can be advertising, electricity, telephone bills, etc.

Taxes Payable: Unpaid Taxes that you owe the government.

Current Loans Payable: Loans from banks or investment from the investors that you have not paid back yet.

Long Term Loans Payable: The Long-term loans that are yet to be paid.

You can customize the Liabilities section as required.

Owner’s Equity

Insert the following items in the Owner’s Equity.

Owner’s Capital: Capital is the owner’s investment in the company. You need to add the net income earned by the company. Whereas deduct any withdrawals by the owner from it.

Note: The owner’s bank account and the business bank account two are separate entities.

Retained earnings: Net income retained by the corporation and distributed to its owners as dividends.

Important Financial Ratios From Balance Sheet

In the end, we have included some important financial ratios from the Balance Sheet than can be helpful for further analytics:

1. Debt Ratio.
2. Current Ratio.
3. Working Capital.
4. Assets to Equity Ratio.
5. Debt to Equity Ratio.

Advantages of A Balance Sheet

As the name states, it keeps business things in balance. As per the accounting rule, the total assets must be equal to liabilities and equity. Hence, if they don’t balance there is a mistake in the accounting process.

A balance sheet helps in calculating and analyzing financial ratios. Moreover, these ratios are helpful in comparing your competitors as well as your company’s financial strengths.

A balance sheet is also helpful in getting credit from financial institutes. Furthermore, seeing a balance sheet, n investor can make a decision for investment.

Limitation Of A Balance Sheet

Long-term assets are recorded on book value. Whereas, the actual market value is less of those assets. Therefore, these overvalued/undervalued assets distort the company’s wealth.

A balance sheet often misses the internally acquired assets. Furthermore, it also doesn’t take into consideration the assets that cannot be measured in monetary terms. These assets include irreplaceable technical workforce, online sales channels, loyalty, honesty, etc.

Moreover, the balance sheet records some of the assets in estimates that again doesn’t provide the true financial picture of the company.

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If you have any queries or questions, share them in the comments below. We will be more than happy to help you.

Frequently Asked Questions

How do you create a balance sheet?

You need to follow these 5 step process to prepare a balance sheet:

1. Determine the reporting date and period.
2. Identify your Assets.
3. Identify your Liabilities.
4. Calculate Shareholders’ Equity
5. Add Total Liabilities to Total Shareholders’ Equity and Compare to Assets.

What does a strong balance sheet look like?

Simply having assets more than its liabilities cannot make a balance sheet strong. Strong balance sheets will have the following:

• Intelligent working capital.
• Positive Cash Flow.
• Proper capital structure.
• Income-generating assets.

What are the two types of balance sheets?

There are two types of balance sheets: Personal and Business. The personal Balance sheet displays an individual’s personal assets and liabilities. Whereas, the Business Balance Sheet consists of accounts payable, accounts receivables, intangible assets, etc.

Why is it called a balance sheet?

According to the balance sheet equation Asset – Liabilities = Owner’s Equity, each side of this equation must balance at the end of the period.

Who invented the balance sheet?

It is presumed that Luca Pacioli, a Franciscan Monk, presented the concept of balance sheet in the 15th Century.

What items are not presented on the balance sheet?

Off-balance sheet assets do not appear on the balance sheet. These OBS assets include leaseback agreements, operating leases, etc.

Where is TDS shown in the balance sheet?

TDS is a liability. It is the amount of tax we owe to the Government that we collect on behalf of the Government.

What is the difference between vertical and horizontal balance sheets?

Businesses that operate at lower scales will use vertical balance sheet. It consists of a single column to report the amounts.

Whereas, businesses that operate on a bigger scale, and have different branches/departments, prepare horizontal balance sheets. It is an additional balance sheet that displays the performance of each department/branch.

About Shabbir Bhimani

I have worked in Excel and like to share functional excel templates at ExcelDataPro.

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Top Excel Templates for Accounting

December 29, 2015

In this article, you’ll find the most comprehensive list of free, downloadable accounting templates for a variety of use cases.

Accounting Journal Template

An accounting journal is an accounting worksheet that allows you to track each of the steps of the accounting process, side by side. This accounting journal template includes each step with sections for their debits and credits, and pre-built formulas to calculate the total balances for each column.

We’ve also included links to similar accounting templates in Smartsheet, a spreadsheet-inspired work management tool that makes accounting processes even easier and more collaborative than Excel.

Accounts Payable Template

When making large purchases for items like inventory, supplies, or equipment it may be necessary to do so on credit, which could result in multiple monthly payments made to different vendors or suppliers, due on different dates. Using this accounts payable template will help to keep track of what you owe to each party, and will provide a quick look at the total outstanding balances and due dates.

Accounts Receivable Template

Every company should have a process in place to manage the outstanding balances owed to them. Using this accounts receivable template will help streamline the process by providing a place for you to track the amounts due to your company and help prioritize collection efforts.

Bill To Invoice Template

For any company providing goods or services, using an invoice that looks professional and can be customized to fit your needs, is important. This simple bill template will help you get started quickly. Add your company details and payee information, provide an itemized list of the description, quantity, and price of each item you are charging for, and include directions on how your customer may remit payment.

Bill of Lading Template

A bill of lading is a document detailing how goods are being shipped from a seller to a recipient. It includes details about the items being shipped, the quantity of items included in the shipment, and the destination address. Use a bill of lading template to ensure you complete this document for each shipping transaction. This template includes a signature section that should be signed by you, then the shipping company, and finally the recipient, so that if the shipment is lost, the signature detail will help identify at what point it was lost and who was liable.

Billing Statement Template

A billing statement is helpful if you receive regular bi-monthly or monthly payments from your customers. Use this billing statement template to track customer invoices, account details, and billing status, all in one location. Additionally, this template looks professional and is customizable to match your needs.

Cash Flow Statement Template

A cash flow statement is important to provide a good picture of the inflow and outflow of cash within your company. It shows where the money came from (cash receipts) and where the money went to (cash paid). Use a cash flow statement template, in conjunction with your balance sheet and income statement, to provide a comprehensive look into the financial status of your company. This cash flow template includes two additional worksheets to track month-to-month and year-to-year cash flow.

Cash Flow Forecast Template

Creating a cash flow forecast can be helpful for managing your business’ finances. It enables you to estimate how much money your business will make and spend at any given point, and will allow you to take the appropriate steps to ensure that your cash outflow is not more than your inflow. Use a simple cash flow forecast template to get started quickly. Be sure you include all income including revenue and investments, and account for all expenses including fixed costs.

Expense Report Template

A simple expense report is helpful to keep track of business expenses for an individual, department, project, or company, and provides a quick way to document and track expense details. You can require that your team submit monthly expense reports or as the expenses are accrued. Use this expense report template to quickly input specific expense details and obtain approvals as needed.

Income Statement Template

An income statement, or profit and loss statement, provides a look into the financial performance of a company over a period of time. The statement provides a summary of the company’s revenue and expenses, along with the net income. Use this income statement template to create a single-step statement that groups all revenue and expenses, and is helpful for businesses of all sizes.

Payment Schedule Template

You will likely have multiple bills to pay in a month, to different companies and on different dates. It is important to have a way to track when specific bills are due, the amount that is due, and to whom. Use a simple payment schedule template to track these details. This payment schedule template will help you remember when each bill is due and be able to budget accordingly.

Simple Balance Sheet Template

A simple balance sheet template provides a quick snapshot of a company’s financial position, at a given moment. Use this balance sheet template to summarize the company’s assets, liabilities, and equity, and give investors an idea of the health of the company.

Travel Itinerary Template

Whenever you or your team are scheduled for business trips, it’s helpful to have a travel itinerary that lists the details for transportation, lodging, car rentals, meetings and more. Use a simple business travel itinerary template to keep all of these details in one location, and be able to share the details with important stakeholders.

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