Business balance sheets: a beginners guide
A balance sheet is a financial statement that summarises the state of a business’s finances at a certain point in time. An accounting balance sheet provides you with an overview of the financial health of your company, and also provides grounds on which to base financial decisions. Therefore, business balance sheets are essential to show business owners and investors if funds are being used efficiently within the company.
In accounting, balance sheets represent the business’s assets (such as cash, accounts receivable and inventory), liabilities (such as accounts payable and outstanding debt to creditors) as well as owners’ or investors’ equity. A healthy business balance sheet displays the asset and liability quantities perfectly in balance. On a business balance sheet, subtracting the value of a business’s liabilities from the value of a business’s assets will give you the true value of owners’ equity. A successful business’s balance sheet should ideally display a positive amount of equity as this value represents the amount invested in the company as well as profit.
Preparing business balance sheets need not be a time-consuming task. QuickBooks accounting software comprises a range of financial software packages that are designed to meet the accounting needs of small to medium businesses. Peruse our range of accounting software packages to find one for your business.
Contents of a business balance sheet
As discussed above, a business balance sheet comprises the assets, liabilities and owners’ equity of a particular business. These elements form the basis of an effective accounting balance sheet and they’re listed below in greater detail:
- Fixed assets – These include all tangible assets or source of funds owned by the business such as property, vehicles or equipment as well as intangible assets such as investments, trademarks and operating businesses.
- Current assets – These include short-term assets in the form of funds owed to the business by clients or other third parties.
- Current liabilities – These are amounts owed to third parties by the business such as short-term loans, overdrafts, taxes or money owed to suppliers.
- Long-term liabilities – These are similar to current liabilities except that they are amounts owed over the long term such as business loans taken over three to four year periods and finance agreements to third party creditors.
Business balance sheets are important to the success of every business because it gives owners and investors a clear indication of how well or poor a business is performing in terms of profit or loss. With QuickBooks’ range of financial software packages, you can prepare accurate accounting balance sheets effortlessly, eliminating the need for a qualified account.
Choose the ideal QuickBooks software package for your business
QuickBooks accounting software is available in three distinct suites that are designed to cater to the needs of small to medium sized businesses. Choose QuickBooks SimpleStart to facilitate your accounting needs for your start-up or home-based business, QuickBooks Pro for seamless financial management for your small business or QuickBooks Premier for a comprehensive solution to your business’s unique accounting requirements.
QuickBooks SimpleStart - for new and home based business
The simplest way to manage and track money going in and out of your business.
QuickBooks Pro - manage your business accounts simply and easily
Manage your business accounts simply and easily.
QuickBooks Premier - fast and easy advanced accounting
Fast and easy advanced accounting.
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