How To Do A Balance Sheet

in this video we're going to go over how to do a balance sheet and how to format it correctly and set it up right and this is another video from accounting 101 org you can visit our website for more accounting videos tutorials and explanations like this at accounting 101 org okay so here we have a balance sheet for scammer corporation and it's on December 31st 2011 and that's that's one of the first things that we should point out about a balance sheet is that a balance sheet is always a snapshot in time or in other words at any given point or on any given day this is our list of accounts where the business stands and so that's an important distinction between the balance sheet or and the income statement or the cat the statement of cash flows the statement of cash flows and the belt or and the income statement are both statements that cover a period of time usually the last quarter or the last year whereas the balance sheet is like I said just on any given day it's a snapshot in time so the first section that you'll see well first of all you want to notice that the balance sheet is divided into two sides the left side which has the assets and the right side which has liabilities and stockholders equity so first we come up here to assets and you'll usually list your current assets first and then investments if you have any property plant and equipment and then as you come down you will go to intangible assets and then other assets so after current assets current assets are assets that are expected to be used up within a year so that's why you'll see things like cash accounts receivable inventory prepaid insurance things that will just be used up within a year on average that's the assumption anything that goes in current assets anything after current assets is non current assets or long-term assets and so that's everything from investments to other assets and these are just assets that are expected to be around longer than a year and so it makes sense it's just it's stuff like land buildings equipment this is where accumulated depreciation is listed which just you know brings you to the correct value of the equipment that's a whole other discussion and intangible assets such as goodwill and patents or also you know long term assets usually even if they're being amortized they'll be around longer than a year so they're listed in long term assets now if we come over here to liabilities liabilities are the same as assets and that they're they're differentiated between current liabilities and long-term liabilities so current liabilities again it's the same thing any liabilities there that are expected to be satisfied within a year so you have accounts payable wages payable interest payable taxes payable and these are things that just need to be satisfied within a year and then you have long term liabilities which are liabilities that don't need to be satisfied within the next year and so that things like notes payable bonds payable any major loans or you know just ending liabilities that don't need to be paid off within the next year so then you with total liabilities and then you start the stockholders equity section stockholders equity is just what the owners of the company own and it's broken down into different accounts such as common stock retained earnings other things that could be here are preferred stock additional paid-in capital things like that and because stockholders equity and liabilities are both on the right side you know they are added together and as you see here the final line is total liabilities and stockholders equity and over here on assets you have total assets and these two amounts will always be the same so you know you've probably heard assets equals liabilities plus owner's equity and that's just the general accounting equation so assets equals liabilities plus owner's equity and that's why the left and right side will always balance and that's also why it's called the balance sheet so it's a basic explanation how to set up a balance sheet in an example format that you can follow this has been another video from accounting 101 org again you can visit our site for more accounting videos tutorials and explanations like this at accounting 101 org

Channel: SuperfastCPA

Views: 1,500,679

Keywords: balancesheet, accounting101.org, financialaccounting, accountingfordummies

Id: hhKO6MRvk_c

Length: 5min 37sec (337 seconds)

Published: Sat Oct 29 2011