The balance sheet details what a business owns (assets), what it owes (liabilities), and its net worth (equity) at a specific point in time. Therefore, a balance sheet has three parts: assets, liabilities and ownership equity. It is organized into two sections that must balance, thus the reason it is called a balance sheet. It is derived from the accounting formula that subtracts what you owe from what you own. What you own - what you owe = what you're worth.
The balance sheet, together with the income statement and cash flow statement, are the central financial reports for any business. In fact, the balance sheet is the core component of other financial statements, as all other statements either feed into or are derived from the balance sheet. The balance sheet provides details about the business's finances to potential lenders such as banks, investors, and vendors, and to business owners that manage the day-to-day financial activities of the business.
QuickBooks Online is # 1 in cloud accounting for small businesses1. It organizes all of your business's accounting and financial data into one central location so that you can generate financial reports, including the balance sheet, in just a few clicks. It puts all of your financial information at your fingertips so that you always know where your business stands. QuickBooks Online comes pre-installed with a balance sheet template and does all of the appropriate calculations for you, making it fast and easy to access and review your balance sheet. Try QuickBooks Online for free today.
With QuickBooks Online, you can access and generate over 65 financial reports and statements in just a few clicks. The balance sheet is organized according to generally accepted accounting principles (GAAP). The main categories of assets are listed first, followed by the liabilities. The difference between the assets and the liabilities is the equity (or net worth) of the business and is displayed at the bottom of the report. According to the accounting equation, net worth must equal assets minus liabilities and QuickBooks Online performs the necessary calculations for you. Simply choose Reports > Balance Sheet and the pre-installed balance sheet template is populated with your data in seconds.
Balance sheets can help you identify and analyze trends in your business, especially in the area of accounts receivable and accounts payable. Are your customers paying you on time? Can you collect overdue invoices more aggressively? Do you have any "bad debt" (debt that is unable to be collected)? Are you paying your bills on time? The balance sheet provides business owners with the financial information they need to effectively manage the financial health of the business. Try QuickBooks Online today and see just how easy it is to generate and review your balance sheet.
1 Based on number of paying users as of August 2012