The balance sheet is a document that shows in detail the assets, liabilities and assets available to a company in a given time.

The assets include:

• The money is physically in the company (for example, in his safe), or the money you have deposited in the bank (e.g your checking account).
• Physical elements available to the company for its operations and have a permanent duration (e.g, buildings, land, machinery, vehicles, furniture) or only temporarily (e.g, raw materials, goods).
• Debts that customers have with the company.

Liabilities include:

• Debts that the company has with its suppliers.
• Have outstanding debts with banks and other financial institutions.

While the estate includes:

• Contributions made by the partners or shareholders.
• The benefits or profits that the company has obtained.

In terms of the balance sheet drawing is held every year at the end of the fiscal year of the company (bottom) but also tend to develop balances at beginning of year (opening balance) and balances on a monthly, quarterly or semester (partial balance).

The balance sheet provides us the financial situation of the company (to show what the value of its assets, liabilities and equity), analyze this information (for example, knowing how and where it has invested, how much of that money comes from creditors and how much comes from equity, how efficiently it is using its assets, how well it is managing its liabilities, etc..), and based on that analysis, to make decisions.

Also, when comparing with previous balance allows us to buy the current financial situation of the company with financial situations given at other times (for example, whether increased its assets, how much has reduced its debt, much has changed its wealth, etc…) and thus, for example, whether the company is meeting its financial goals.

The way it usually has a balance sheet showing the assets in one column and liabilities and equity in another.

In the left column are listed the assets usually sorted according to their liquidity, starting with those that are readily convertible into cash, such as cash on hand is the most liquid out there and therefore, lies in first.

And in the right column are listed the liabilities and equity usually sorted according to its enforceability, starting with those with greater enforcement, for example, debts to suppliers tend to be more enforceable than the capital and therefore, are located before them.

The total value of assets must always equal the total value of the liabilities plus total equity value:

Assets = Liabilities + Equity

For example, if a company has assets of U.S. $ 30,000 and liabilities $ 20,000, will have a net worth of $ 10,000, but if, for example, would have assets of U.S. $ 30,000 and liabilities $ 40,000, would have a negative equity of – $ 10,000, and serious financial problems.

Consider the explanation of each of the accounts:

The current assets or assets is an asset that can be easily converted into cash, accounts includes:

• Cash and banks or available: The money the company has in its box or deposited in a bank account.
• Customers, accounts receivable or accounts receivable: The money that customers owe the company as a result of sales made on credit.
• Other debtors, other receivables or non-trade accounts receivable: Money owed to the company, but does not include the balance of the customers.
• Stock or inventories: Include raw materials; work in process and finished products or goods.

The basic structure of the balance we see in the following example:

Balance sheet model

The non-current assets or fixed assets is an asset that can be converted into hard cash, accounts includes:

• Property, plant and equipment: Includes buildings, land, machinery, equipment, vehicles, furniture, appliances, etc…
• Accumulated depreciation: The value of accumulated depreciation of the assets of the old account with the exception of the land is not depreciated.

The current liabilities the obligations or debts due the company has less than a year, includes the accounts:

• Suppliers, accounts payable or trade payables: The money the company owes its suppliers as a result of purchases made on credit.
• Other creditors, other accounts payable or non-trade payables: The money the company owes to others, but that does not include sado which subtracts pay its suppliers.
• Taxes payable or taxes payable: The balance of taxes that the company will pay subtraction.

The non-current liabilities the obligations or debts due the company has more than one year, includes the accounts of:

• Long-term debt: Long-term debt the company has, for example, with financial institutions.

And finally, the heritage or equity account includes:

• Capital or social capital: The contributions made by the partners or shareholders.
• Retained earnings, earnings, earnings or reserves: Retained profits or accumulated in the company after paying dividends.
• Net income or results for the year: Net income before dividends and share as allocated to retained earnings.

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