We've successfully created our income statement and statement of stockholders' equity. Now it's time for our last financial statement: the balance sheet!
Balance sheet explained
The balance sheet goes back to the OG accounting equation. It zones in on assets, liabilities, and equity and essentially provides proof that all three still align!
Assets = Liabilities + Equity
The balance sheet reports a company's total assets, liabilities, and equity at a given point in time. It essentially ensures that the accounting equation still holds true!
How to create a balance sheet
The balance sheet is segmented by assets, liabilities, and equity. It then goes one step further and segments accounts by the type of asset, liability, or equity they are!
Let's go one by one filling them out, starting with assets!
Assets
We'll start with current assets, which based on what we learned in Assets, Liabilities, & Equity, deal with the following accounts:
BALANCE SHEET
| Account | Amount |
|---|---|
ASSETS | |
| Current Assets | |
| Cash | |
| Accounts Receivable | |
| Inventory | |
| Prepaid Insurance | |
| Total Current Assets |
Based on the pre-closing trial balance, these accounts have the following balances...
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