Understanding the basics of a Balance Sheet
Posted on 18th March 2021 at 10:40
A balance sheet is the report of accounts that have to be filed for all registered businesses with Companies House. It provides a snapshot view of the how a company is performing. The Balance sheet has to be filed with Companies House annually. It demonstrates the value of the assets and liabilities and reflects profitability year on year.
A balance sheet provides information needed to assess how financially stable any business is. This is shown by financial ratios that help to determine the solvability of a company which can include gearing ad liquidity ratios. This information is useful to suppliers, shareholders and banks to assess the credibility and borrowing capacity.
There are specialised accounting software packages available in the markets which include the Balance Sheets amongst their functions as part of their reports. This helps to take specific snapshots of any aspects of a balance sheet as and when required. For those who do not wish to invest in specialised accounting software simple balance sheet templates can be created in Excel.
Some of the information featured on the balance sheet includes the following:
The Heading: The heading of a balance sheet includes the name of the company and date, with the letter set at “as at date”. E.g., Wanderer Travels Ltd – Balance Sheet as at 31 March 2021.
Assets: These include all sections of assets including cash, stock, current, intangible and fixed assets, prepayments and customer credit (accounts receivable ledger).
Liabilities: pensions, debt, taxation, accruals and money to be paid to suppliers etc.
Equity: These include income from Profit and Loss Account and issued share capital.
All our UK Business Credit Reports on Limited Companies include latest financials.
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