Contents of the balance sheet

A balance sheet shows:

  • fixed assets - long-term possessions
  • current assets - short-term possessions
  • current liabilities - what the business owes and must repay in the short term
  • long-term liabilities - including owner's or shareholders' capital

The balance sheet is so-called because there is a debit entry and a credit entry for everything (but one entry may be to the profit and loss account), so the total value of the assets is always the same value as the total of the liabilities.

Show moreFixed Assets

Include:

  • tangible assets - e.g. buildings, land, machinery, computers, fixtures and fittings - shown at their depreciated or resale value where appropriate
  • intangible assets - e.g. goodwill, intellectual property rights (such as patents, trade marks and website domain names) and long-term investments
Show moreCurrent assets

Are short-term assets whose value can fluctuate from day to day and can include:

  • stock
  • work in progress
  • money owed by customers
  • cash in hand or at the bank
  • short-term investments
  • pre-payments - e.g. advance rents
Show moreCurrent liabilities

Are amounts owing and due within one year. These include:

  • money owed to suppliers
  • short-term loans, overdrafts or other finance
  • taxes due within the year - VAT, PAYE (Pay As You Earn) and National Insurance
Show moreLong term liabilities

Include:

  • creditors due after one year - the amounts due to be repaid in loans or financing after one year, e.g. bank or directors' loans, finance agreements
  • capital and reserves - share capital and retained profits, after dividends (if your business is a limited company), or proprietors capital invested in business (if you are an unincorporated business)

 

By law the balance sheet must include the elements shown above in bold. However, what each includes will vary from business to business. The firm's external accountant will usually decide how to present the information, although if you have a qualified accountant on staff, they may make this decision.