Balance Sheet
The Balance Sheet shows all the assets and liabilities on a specific day. The statement is based on the following equation:
Total Assets = Total Liabilities + Fund Balance (Equity)
The assets are the resources that are available for use, the liabilities are the amounts owed to someone and the fund balance is the value of the assets that is not owed. The sheet is set up with assets listed and totaled on the left side. On the right side, liabilities are listed and totaled, the fund balance is recorded and then the two are added. The two sides of the balance sheet must be equal.
A simplified example of a balance sheet:
ACME Organization
Balance Sheet
December 31, 200X
| Assets |
| Cash |
$1,500 |
| Accounts Receivable |
620 |
| Equipment |
5,000 |
| |
|
| Total Assets |
$7,120 |
| Liabilities |
| Accounts Payable |
$ 412 |
| Notes Payable |
1,900 |
| Total Liabilities |
2,312 |
| Fund Balance |
4,808 |
| Total Liabilities and fund Balance |
$7,120 |
In a more complex situation, assets may be split into subcategories based on how liquid they are. Example categories are current assets (i.e. cash, accounts receivable), intermediate assets (i.e. equipment) and fixed assets (land, buildings). Likewise, liabilities can be divided into categories such as current liabilities (i.e. accounts payable) and long term liabilities (i.e. mortgages).
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