Not all balance sheet templates are created equal. Some look insanely overwhelming and complex, while others are a lot easier to the eyes and more intuitive to use.
Of course, you’re better off using the latter.
That’s why in this guide, we’ll look into the five essential elements of a reliable balance sheet template, so you can find the perfect template to handle funding and general finances.
A balance sheet is a fundamental financial statement that provides a useful and true view of your business entity’s financial position. It shows the assets, liabilities, and owner’s equity at a specific point in time. Essentially, a balance sheet is a financial statement that calculates your business’s worth (equity) by deducting your business entity’s owed amount (liabilities) from your owned amount (assets).
For some types of companies, balance sheets are used for maintaining compliant accounting records, especially annual reports, but that’s not all. In situations where someone is considering buying your company, as part of the due diligence process, the balance sheet provides the basis for rates of return calculations for potential investors, including evaluating a company’s capital structure.
Balance sheets are also often used with other crucial financial statements to calculate financial ratios, perform fundamental analysis and apply for some types of loans.
While there are many formats you can use to create a balance sheet, many bookkeepers and financial analysts find it easier and more comfortable to simply use an existing template and customize it. Downloading a balance sheet template allows you to use a format you can follow and modify according to your business financial reporting needs, with all of the necessary formulas already built-in.
While balance sheet templates can vary in some features and components, it’s a good idea to choose a template that has the following elements.
From top to bottom, a workable balance sheet needs to include a header, asset, liabilities, and shareholder’s equity. From left to right, the template has description line items and a column with the ending balances in the account aggregations, as noted by each line item of the description.
Standard accounting conventions can display balance sheets in the report form (vertical presentation) or the account form (horizontal presentation). Most balance sheet templates follow either of the two formats, and they usually position the various entries into these sections:
Your most liquid assets, such as inventory and cash, are placed first at the top of the balance sheet. The least liquid assets, such as land, buildings, and machinery, are recorded at the bottom part of the template.
Short-term liabilities, including advances, short-term loans, and creditors are often recorded at the top. On the other hand, long-term liabilities are on the bottom. If a template is worthwhile, you should be able to fill it out easily and tweak the formatting accordingly.
Also read: What Is Pokemon Sleep? The Pokemon App Will Put You To Sleep!Balance sheet templates include pre-configured header blocks you can fill in and modify easily.
The standard balance sheet template header often has spaces set aside for filling in the following:
Reliable balance sheet templates provide an assets block to record your current or short-term and non-current (long-term) assets.
The number and description of the line items in a standard template’s assets block can include (but are not limited to) the following:
Another main element that should be in a helpful balance sheet template is the liabilities block.
The block is where you record your current or short-term and non-current or long-term liabilities in the template, including the following line items.
A balance sheet template wouldn’t be complete without the shareholders’ or owners’ equity block. It consists of the amount invested by stakeholders in your business entity.
The shareholders’ equity block in your balance sheet template can include these line items.
A useful template lays out the necessary elements, formatting, etc., to help simplify preparing your balance sheet. The number and description of line items can vary substantially across templates depending on the nature of your business.
The key is to understand the non-negotiable components of standard templates to create your balance sheets seamlessly and help streamline your business financial reporting process.
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