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Steps to Write a Balance Sheet

>> September 15, 2011

One year ago, I wrote content, "How to Prepare a Balance Sheet of Company?" which you have liked. But all those who are beginner in accounting and doing individual small business, I am teaching some easy steps to write a balance sheet for their business not a company.

1st Step : Collect all your Assets 

You will have the past vouchers and cash memos of your assets. Prices which had been shown in these vouchers, will be the base of writing of all assets in balance sheet. If you do not charging depreciation annually, you should calculate total depreciation of all past years and deduct from voucher price of assets. Some current assets value, you should have to calculate. For example, physical quantity of inventory in the store will be the base of writing closing stock in balance sheet. If you have doubt about any debtor payment, you should deduct it in debtors as provision for doubtful debts. Some current assets, you should calculate by watching your incomes and expenses. All advance expenses whose benefits, you will get in next year, will include in current assets. All incomes which will be received in next financial year, will include in current assets. Check your bank balance and cash in your pocket, these will be current assets and add in assets side of balance sheet.

2nd Step : Write All Outside Liabilities 

Liabilities mean that amount which we have to pay outside. Check your loan register or list and its payable interest. Add it in liability side. After this, see bank overdraft amount and total amount payable to your creditor. Write it in your balance sheet's liability side. Find all outstanding expenses whose benefits, we have received but payment will be done in next financial year. These will be included in current liabilities. Find all advance incomes. We received these incomes but we did not provide service and service will be provided in next financial year. So, add it in liability side.

3rd Step : Write Capital or Goodwill 

If your total assets will be more than your total outside liabilities, it will be capital and add in liability side of balance sheet. If your total outside liabilities will be more than your total assets, it will be goodwill and add it in assets side. 

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