Balance Sheet
SIMPLIFIED BALANCE SHEET
Now read the explanations of each line on the next pages
EXPLANATION OF EACH LINE ON THE BALANCE SHEET
A. FIXED ASSETS
This is the heading used to group together all ‘solid’ assets.
They cannot be turned into cash very quickly
The headings used can be changed to suit you own company
B. Premises
This is the premises your company owns.
C. Motor Vehicles
This is the vehicles you drive whether you have leased or bought them
D. Fixtures & Fittings
This can include furniture and office equipment
E. This is the total value of Fixed Assets
NOTE:
There are 3 columns totalled.
The first column ‘Cost’ is the original cost you bought the asset for.
The second column ‘Depreciation to Date’ is the depreciation that has been charged to the profit and loss account over the past years.
The third column ‘Net Book Value’ is the value left in the assets after depreciation. This is ‘book’ value of the assets based on charging depreciation each year. The real value may be different to the book value i.e. the value of the premises may have gone up because the area it is in is now a much more desired area than when it was bought. Assets can be revalued to take value changes into account, but it is beyond the scope of this book.
F. CURRENT ASSETS
This the heading used to group together assets that change regularly because of transactions happening all the time. They can be turned into cash quickly.
G. Bank
This is how much money you have
H. Trade Debtors
This is how much money your customers owe you
I. Trade Stock
This is the value of the stock in you warehouse at the end of the year at cost
J. This is the total value of Current Assets
K. CURRENT LIABILITIES
This is the heading used to group together liabilities that change regularly, and usually have to be paid quickly, that is in the short term.
L. Trade Creditors
This is how much money you owe your suppliers
M. VAT.
This is how much Value Added Tax remained unpaid at the end of the year to the revenue commissioners
N. Paye/Prsi
This is how much PAYE/PRSI tax remained unpaid at the end of the year to the revenue commissioners
O. Directors Loan
This is how much money the Directors have loaned to the company and has not been paid back to them yet.
P. This is the total value of Current Liabilities.
Q. NET CURRENT ASSETS
As Current Assets and Current Liabilities refer to items that can be quickly converted to cash, this is the amount that would be left over if all current liabilities had to be paid out of current assets.
R. NET TOTAL ASSETS
This is the value of all the assets that the company has if they were all sold at the values on the balance sheet, less all of the current liabilities if they were all paid at the values on the balance sheet. This does not include paying long term liabilities.
S. FINANCED BY:
T. LONG TERM LIABILITIES
This heading groups together liabilities that will not have to be paid for a number of years, and is effectively used to finance the company. Usually Long term liabilities do not have to be paid back for a year or more.
U. Bank Loan
This is a loan from a Bank that does not have to be paid back for over a year. Repayments and interest are paid every month, but the bank will not look for the money back immediately.
V. Share Capital
This is the cost the shares were to the original shareholders when they started the company.
When you start a company you must buy shares in it. (You usually lend the company money in addition to buying shares).
W. Revenue Reserves
This is the accumulated profits (or losses) accumulated over the previous years
X. TOTAL FINANCED BY
This is always equal to the Net Total Assets.
This figure is how the company is paying for all its assets and liabilities.
| A. | FIXED ASSETS | Cost | Depreciation to Date |
Net Book Value |
| B. | Premises | 50,000 | 40,000 | 10,000 |
| C. | Motor Vehicles | 20,000 | 16,000 | 4,000 |
| D. | Fixtures & Fittings | 10,000 | 8,000 | 2,000 |
| E. | 80,000 | 64,000 | 16,000 | |
| F. | CURRENT ASSETS | |||
| G. | Bank | 10,000 | ||
| H. | Trade Debtors | 40,000 | ||
| I. | Trade Stock | 20,000 | ||
| J. | 70,000 | |||
| K. | CURRENT LIABILITIES | |||
| L. | Trade Creditors | 15,000 | ||
| M. | V.A.T. | 2,000 | ||
| N. | Paye/Prsi | 500 | ||
| O. | Directors Loan | 5,000 | ||
| P. | 22,500 | |||
| Q. | NET CURRENT ASSETS | 47,500 | ||
| R. | NET TOTAL ASSETS | 63,500 | ||
| S. | FINANCED BY: | |||
| T. | LONG TERM LIABILITIES | |||
| U. | Bank Loan | 10,000 | ||
| V. | Share Capital | 100 | ||
| W. | Revenue Reserves | 53,400 | ||
| X. | TOTAL FINANCED BY | 63,500 |
Now read the explanations of each line on the next pages
EXPLANATION OF EACH LINE ON THE BALANCE SHEET
A. FIXED ASSETS
This is the heading used to group together all ‘solid’ assets.
They cannot be turned into cash very quickly
The headings used can be changed to suit you own company
B. Premises
This is the premises your company owns.
C. Motor Vehicles
This is the vehicles you drive whether you have leased or bought them
D. Fixtures & Fittings
This can include furniture and office equipment
E. This is the total value of Fixed Assets
NOTE:
There are 3 columns totalled.
The first column ‘Cost’ is the original cost you bought the asset for.
The second column ‘Depreciation to Date’ is the depreciation that has been charged to the profit and loss account over the past years.
The third column ‘Net Book Value’ is the value left in the assets after depreciation. This is ‘book’ value of the assets based on charging depreciation each year. The real value may be different to the book value i.e. the value of the premises may have gone up because the area it is in is now a much more desired area than when it was bought. Assets can be revalued to take value changes into account, but it is beyond the scope of this book.
F. CURRENT ASSETS
This the heading used to group together assets that change regularly because of transactions happening all the time. They can be turned into cash quickly.
G. Bank
This is how much money you have
H. Trade Debtors
This is how much money your customers owe you
I. Trade Stock
This is the value of the stock in you warehouse at the end of the year at cost
J. This is the total value of Current Assets
K. CURRENT LIABILITIES
This is the heading used to group together liabilities that change regularly, and usually have to be paid quickly, that is in the short term.
L. Trade Creditors
This is how much money you owe your suppliers
M. VAT.
This is how much Value Added Tax remained unpaid at the end of the year to the revenue commissioners
N. Paye/Prsi
This is how much PAYE/PRSI tax remained unpaid at the end of the year to the revenue commissioners
O. Directors Loan
This is how much money the Directors have loaned to the company and has not been paid back to them yet.
P. This is the total value of Current Liabilities.
Q. NET CURRENT ASSETS
As Current Assets and Current Liabilities refer to items that can be quickly converted to cash, this is the amount that would be left over if all current liabilities had to be paid out of current assets.
R. NET TOTAL ASSETS
This is the value of all the assets that the company has if they were all sold at the values on the balance sheet, less all of the current liabilities if they were all paid at the values on the balance sheet. This does not include paying long term liabilities.
S. FINANCED BY:
T. LONG TERM LIABILITIES
This heading groups together liabilities that will not have to be paid for a number of years, and is effectively used to finance the company. Usually Long term liabilities do not have to be paid back for a year or more.
U. Bank Loan
This is a loan from a Bank that does not have to be paid back for over a year. Repayments and interest are paid every month, but the bank will not look for the money back immediately.
V. Share Capital
This is the cost the shares were to the original shareholders when they started the company.
When you start a company you must buy shares in it. (You usually lend the company money in addition to buying shares).
W. Revenue Reserves
This is the accumulated profits (or losses) accumulated over the previous years
X. TOTAL FINANCED BY
This is always equal to the Net Total Assets.
This figure is how the company is paying for all its assets and liabilities.