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DescriptionHow to format a balance sheet
HOW TO CREATE A BALANCE SHEET
NOTE: In early 2006, Rasmuson Foundation announced modified format requirements for both the operating financial statements and the annual audit as requested in the application process. The Foundation felt these modifications to be necessary in order to provide more easily understood information to assist boards and staff in making informed, high quality decisions, be they organizational, programmatic or financial. This new format requirement went into effect for applications beginning July 1, 2007 (see specific requirements on website).
This modified format is GAAP (generally accepted accounting principle) compliant and has been reviewed, discussed and endorsed by much of the statewide accounting / audit community.
Since mid-2006, The Foraker Group has provided training opportunities across the state and also offers a technical assistance hotline at 907 743-1210 or toll free 877 834-5003.
A sample audit document with detailed explanations is available on the Foundation website. This includes a balance sheet in the modified format.
The following document discusses “balance sheets” in a general sense and is not intended to be a substitute for qualified financial expertise. The specific format changes, as now required, are identified.
A balance sheet is a snapshot of a business’ financial condition at a specific moment in time. A balance sheet comprises assets, liabilities and net assets (equity). At any given time, assets must equal liabilities plus net assets (equity).
The balance sheet must use a two-year comparative format. The balance sheet should provide the data for both the current year period and the data for the same period for the prior year.
An asset is anything a business owns that has monetary value. List anything of value that is owned or legally due the business. Assets are divided into short-term (current assets) and long-term (fixed assets and long-term investments). Total assets is the total of all short-term and long-term assets.
Cash: list cash and resources that can be converted into cash within 12 months of the date of the balance sheet (or during one established cycle of operation). Include money on hand and demand deposits in the bank, e.g., checking accounts and regular savings accounts.
Petty cash: if your business has a fund for small miscellaneous expenditures, include the balance in that account here (unrestricted cash).
Short-term investments: also called temporary investments or marketable securities, these include interest- or dividend-yielding holdings expected to be converted into cash within a year. List stocks and bonds, certificates of deposit and time-deposit savings accounts at either their cost or market value, whichever is less.
Accounts receivable: the amounts due from customers in payment for merchandise or services.
Inventory: includes raw materials on hand, work in progress and all finished goods, either manufactured or purchased for resale.
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