Balance Sheet Example

Here we will come back to the concept of Balance Sheet and provide explanations on what items you can find on this financial statement and also present Balance Sheet Example for a better understanding, how to compose it and what information is necessary for its preparation.

Here there will be also balance sheet template and sample format presented and explained to guide you through the process and provide knowledge of how to prepare this financial statement and understand it.

The Essence Of Balance Sheet

Coming back to the essence of Balance Sheet remember that it is one of the three main financial statements, which include:

1. Balance Sheet / 2. Income Statement / 3. Cash Flow Statement.

Balance Sheet reflects structure of the company’s assets and financing sources, used to finance these assets (i.e. equity and/or liabilities) as of particular date

This means, that in this financial statement we can find information on what kind of assets business had on the particular day and how these assets were financed, i.e.:

either by the own means of shareholders (equity), or
by the borrowed financial means (liabilities), or by the mix of these two sources

From the name of this financial statement, i.e. Balance Sheet, we can understand, that there should be a balance between its parts, i.e.

Assets must be equal to the sum of Equity and Liabilities

This is true since this financial statement reflects the essence of the Accounting Equation.

Items On The Balance Sheet

The following items can be found on the Balance Sheet and will be included into the sample Balance Sheet:

I. Assets – these are physical (tangible) things or intangible items which have a monetary value and are owned by the business. On the Balance Sheet assets are divided into:

a) current assets – which are reasonably expected to be realized in cash or sold within one year or less in the normal operations of the business;

b) long-term (fixed) assets – permanent assets or relatively fixed in nature and used by the business in its operations for the period longer than one year.

II. Equity (Owners’ equity) – residual claim against total assets of business after all the liabilities are deducted. In other words equity represents right of the shareholders to get share of the assets the business owns after all liabilities have been paid. Equity is not classified into current and long-term part, since it does not have maturity date and there is no obligation to pay back equity to the shareholders. It might be done only after the liquidation of the business.

III. Liabilities – debts owed to third parties, i.e. creditors, which have a certain maturity date and must be repaid.

Liabilities are also divided into 2 groups:

a) current liabilities – payable within the period of one year or shorter. Usually to be repaid back from the current assets

b) long-term liabilities – payable within the period longer than one year

Balance Sheet Example

Below you can find Balance Sheet Example and related explanations on the presentation of separate items in this financial statement.

Additional comments on the Sample Balance Sheet (check also more examples on balance sheet accounts):

Items in the Balance Sheet (explore Balance Sheet Definition here) on the Assets side are presented starting from the most liquid ones and ending with the least liquid. Liquidity means the speed with which assets can be converted into cash. We start from Cash, then go to the Accounts Receivable, which can be quite quickly converted into cash, then to Inventories, which are less liquid comparing to the Accounts Receivable and so on
In the Balance Sheet on the Liabilities and Equity side first we include liabilities, i.e. showing how much financing the business will have to return to creditors, and then include equity, i.e. residual right of shareholders to get assets, which remain after all liabilities are paid.
This is a Sample Balance Sheet, not a template, which can be used for any business. In practice depending of the types of activities the business carries on the Balance Sheet might include more items than indicated above

One More Balance Sheet Sample

Find here simplified Balance Sheet Sample. This is a snapshot of a fictional company’s financial position as of December 31, 2022. All figures are in thousands of dollars.

Balance Sheet As of December 31, 2022

Assets	Amount ($)	Liabilities	Amount ($)
Current Assets		Current Liabilities
Cash	10,000	Accounts Payable	5,000
Accounts Receivable	8,000	Salaries Payable	1,000
Inventory	7,000	Short-term Loans	2,000
Prepaid Expenses	1,000	Taxes Payable	500

Total Current Assets	26,000	Total Current Liabilities	8,500

Non-Current Assets		Non-Current Liabilities
Property, Plant, & Equipment	20,000	Long-term Loans	5,000
Intangible Assets	4,000	Deferred Tax Liabilities	1,000
Investments	6,000

Total Non-Current Assets	30,000	Total Non-Current Liabilities	6,000

Total Assets	56,000	Total Liabilities	14,500

Equity	Amount ($)
Common Stock	30,000
Retained Earnings	11,500

Total Equity	41,500

Total Liabilities & Equity	Amount ($)
Total Liabilities + Total Equity	56,000

This balance sheet is balanced, meaning that Total Assets = Total Liabilities + Total Equity. Note that this is a simplified example and actual balance sheets may contain more line items and details.

All Balance Sheet Related Topics to Explore: