Balance Sheet

As its name suggest your balance sheet balances two different fiscal elements, and it has to accord with other financial information produced for your business.

 What a balance sheet includes

The elements of your business that will need to be included in the balance sheet are:



Assets – the balance sheet summarises all your business assets. Assets include anything your business owns such as buildings, cars, and equipment and stock. It will also set out cash in hand and at the bank, as well as all monies owing to you by your debtors. All these elements are added together to give your total net assets at a particular date.



Business liabilities – Below your assets you will list your business liabilities. These will include the total monies you owe to suppliers and other creditors including your bank, utility companies and HM Revenue and Customs.



The liabilities of your business are then subtracted from your total assets to give your business a net worth – the value of your business in terms of shareholders’ funds.



Reconciliation

Different forms of company will have their balance sheets laid out slightly differently. However, the purpose of all balance sheets is to give a statement of net worth at any point in time (usually the financial year-end). The balance sheet is then reconciled with the profitand loss account, which concerns itself with the trading history of one particular financial year.



Lodging

The balance sheet in the final accounts is usually prepared by your accountants and then signed by yourself and (if you are a limited company) a fellow director. The balance sheet for all limited companies is bound within the company accounts and then lodged with Companies House. The balance sheet and profitand loss accounts of all limited companies can be viewed by anyone for a small charge.