Preparing a balance sheet is not that difficult provided one understands how to classify financial information. By organizing in an appropriate manner your company's assets, liabilities, and equity, you could see your company's financial well-being and make better decisions concerning your business and the steps necessary for future development.

Once the assets, liabilities, and equity have all been accounted for, the final step is to ensure the balances on the balance sheet. In other words, the sum total of assets equals the sum total of liabilities added to shareholders' equity:
Total Assets = Total Liabilities + Shareholders' Equity
If the balance sheet does not balance, recheck the calculation and ensure proper categorization and accounting of all the financial items.

Shareholders' equity, also known as owner's equity in private companies, is what is left of the company's assets after all of its liabilities are netted out. It consists of:
i.) Common stock: The par value of shares issued to shareholders.
ii.) Earnings retained: The profits that have been withheld from the realization as dividends.
iii.) Paid-in capital in excess: Funds derived from issuing stock above par.
iv.) Treasury stock: The value of a company's repurchased shares.
The equity section gives insight into the financial strength of a company and depicts returns it can provide for its owners or shareholders.

Liabilities fall into two categories: current and non-current liabilities.
1. Current Liabilities: This consist of liability, which are due for settlement within one calendar year. Examples include:
i.) Accounts Payable: This refers to the sum which is owed to suppliers for acquiring goods or services.
ii.) Short-term loans: This refers to the amount loaned to be repaid within a year.
iii.) Accrued expenses: This refers to wages, taxes, or other monies that the business incurred but not paid.
2. Non-Current Liabilities: These are the long-term debts or liabilities that fall outside one year. Examples include:
i.) Non-current liabilities: Bonds, mortgages, or loans more than one year from expiration.
ii.) Non-current tax liabilities: Taxes owed but not payable until a later period.
Current liabilities should be written first, then non-current liabilities.

Assets are classified into two major types, one is current and the other is non-current or long-term.
1. Current Assets: These are assets either expected to be converted into cash or used within one year. These include: i.) Cash and cash equivalents Cash, bank balances, etc. ii.) Accounts receivable Amounts owed to the company by customers. iii.) Inventory Raw materials, work-in-progress, and finished goods. iv.) Prepaid expenses Payments made in advance for goods or services.
2. Non-Current Assets: These are long-term assets that provide value over a period longer than one year. Examples include:
i.) Property, plant, and equipment (PPE): Land, buildings, machinery, and other physical assets.
ii.) Intangible assets: Patents, trademarks, copyrights, and goodwill.
iii.) Investments: Stocks, bonds, or other long-term investments.
To prepare the asset side of your balance sheet, first, make a list of all the current assets by liquidity-the easier it is to liquidate, the higher in the list it gets-and then non-current assets.

A balance sheet is one of the most often used financial statements that businesses rely on to measure their financial situation. It presents a snapshot of what a company's finances look like at a certain point in time, listing its assets, liabilities, and equity. For business owners, accountants, and investors, learning how to make a balance sheet is, therefore, important. To help you follow it step-by-step, here's how to make a balance sheet.
A balance sheet follows the basic accounting equation: Assets = Liabilities + Shareholders' Equity
Where Assets represent what the company owns. Liabilities represent what the company owes. Equity is the owners' claim after all liabilities have been settled (also called net worth).
The balance sheet is divided into two major sub-divisions, one to show assets on the left side and liabilities and equity on the right side. Both the sides should always balance, hence it is called a "balance" sheet.

Preparing a balance sheet is not that difficult provided one understands how to classify financial information. By organizing in an appropriate manner your company's assets, liabilities, and equity, you could see your company's financial well-being and make better decisions concerning your business and the steps necessary for future development.

Once the assets, liabilities, and equity have all been accounted for, the final step is to ensure the balances on the balance sheet. In other words, the sum total of assets equals the sum total of liabilities added to shareholders' equity:
Total Assets = Total Liabilities + Shareholders' Equity
If the balance sheet does not balance, recheck the calculation and ensure proper categorization and accounting of all the financial items.

Shareholders' equity, also known as owner's equity in private companies, is what is left of the company's assets after all of its liabilities are netted out. It consists of:
i.) Common stock: The par value of shares issued to shareholders.
ii.) Earnings retained: The profits that have been withheld from the realization as dividends.
iii.) Paid-in capital in excess: Funds derived from issuing stock above par.
iv.) Treasury stock: The value of a company's repurchased shares.
The equity section gives insight into the financial strength of a company and depicts returns it can provide for its owners or shareholders.

Liabilities fall into two categories: current and non-current liabilities.
1. Current Liabilities: This consist of liability, which are due for settlement within one calendar year. Examples include:
i.) Accounts Payable: This refers to the sum which is owed to suppliers for acquiring goods or services.
ii.) Short-term loans: This refers to the amount loaned to be repaid within a year.
iii.) Accrued expenses: This refers to wages, taxes, or other monies that the business incurred but not paid.
2. Non-Current Liabilities: These are the long-term debts or liabilities that fall outside one year. Examples include:
i.) Non-current liabilities: Bonds, mortgages, or loans more than one year from expiration.
ii.) Non-current tax liabilities: Taxes owed but not payable until a later period.
Current liabilities should be written first, then non-current liabilities.

Assets are classified into two major types, one is current and the other is non-current or long-term.
1. Current Assets: These are assets either expected to be converted into cash or used within one year. These include: i.) Cash and cash equivalents Cash, bank balances, etc. ii.) Accounts receivable Amounts owed to the company by customers. iii.) Inventory Raw materials, work-in-progress, and finished goods. iv.) Prepaid expenses Payments made in advance for goods or services.
2. Non-Current Assets: These are long-term assets that provide value over a period longer than one year. Examples include:
i.) Property, plant, and equipment (PPE): Land, buildings, machinery, and other physical assets.
ii.) Intangible assets: Patents, trademarks, copyrights, and goodwill.
iii.) Investments: Stocks, bonds, or other long-term investments.
To prepare the asset side of your balance sheet, first, make a list of all the current assets by liquidity-the easier it is to liquidate, the higher in the list it gets-and then non-current assets.

A balance sheet is one of the most often used financial statements that businesses rely on to measure their financial situation. It presents a snapshot of what a company's finances look like at a certain point in time, listing its assets, liabilities, and equity. For business owners, accountants, and investors, learning how to make a balance sheet is, therefore, important. To help you follow it step-by-step, here's how to make a balance sheet.
A balance sheet follows the basic accounting equation: Assets = Liabilities + Shareholders' Equity
Where Assets represent what the company owns. Liabilities represent what the company owes. Equity is the owners' claim after all liabilities have been settled (also called net worth).
The balance sheet is divided into two major sub-divisions, one to show assets on the left side and liabilities and equity on the right side. Both the sides should always balance, hence it is called a "balance" sheet.