CHAPTER 12 - BALANCE SHEET PROJECTIONS
This is where lenders and investors will to
look to find out what the equity and collateral of your company is going to be worth.
List anything of value that is owned or legally due the business. Total assets include all
net values. These are the amounts derived when you subtract depreciation and amortization
from the original costs of acquiring the 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 total here.
- 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.
- 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 costs or market value, whichever is
- Prepaid expenses -- Goods, benefits or services a business
buys or rents in advance. Examples are office supplies, insurance protection and floor
- Long-term Investments -- Also called long-term assets, these
are holdings the business intends to keep for at least a year and that typically yield
interest or dividends. Included are stocks, bonds and savings accounts earmarked for
Also called plant and equipment. Includes all resources a
business owns or acquires for use in operations and not intended for resale. Fixed assets
may be leased. Depending on the leasing arrangements, both the value and the liability of
the leased property may need to be listed on the balance sheet.
- Land -- List original purchase price without allowances for
- Improvements (Including leasehold improvements)
List all debts, monetary obligations and claims payable within 12 months or within one
cycle of operation. Typically they include:
- Accounts payable -- Amounts owed to suppliers for goods and
services purchased in connection with business operations.
- Notes payable -- The balance of principal due to pay off
short-term debt for borrowed funds. Also includes, the current amount due of total balance
on notes whose terms exceed 12 months.
- Interest payable -- Any accrued fees due for use of both
short-and long-term borrowed capital and credit extended to the business.
- Taxes payable -- Amounts estimated by an accountant to have
been incurred during the accounting period.
- Payroll accrual -- Salaries and wages currently owed.
Notes payable -- List notes, contract payments or mortgage payments due over a period
exceeding 12 months or one cycle of operation. They are listed by outstanding balance less
the current position due.
Also called owner's equity, net worth is the claim of the owner(s) on the assets of the
business. In a proprietorship or partnership, equity is each owner's original investment
plus any earnings after withdrawals. In a corporation it is the capital investment paid
for the issuance of stock, plus the surplus paid in by the principals, and the after tax
Total Liabilities and Net Worth
The sum of these two amounts must always match that for total assets.
The Balance Sheet Worksheet
- Current Assets (Net Values)
- Cash $
- Petty cash $
- Accounts receivable $
- Inventory $
- Short-term investment $
- Prepaid expenses $
- Long-term investments $
- Fixed assets
- Land $
- Buildings $
- Improvements $
- Equipment $
- Furniture $
- Automobile/vehicles $
- Other Assets
- Total Assets $
- Current Liabilities (within 12 months)
- Accounts payable $
- Notes payable $
- Interest payable $
- Taxes Payable
- Federal income tax $
- State income tax $
- Self-employment tax $
- Sales tax (SBE) $
- Property tax $
- Payroll accrual $
- Long-term liabilities (over 12 months)
- Notes payable $
- Total Liabilities $
- Net worth (owner equity) $
- If Proprietorship or Partnership (name's) equity $
- If Corporation Capital stock $
- Surplus paid in $
- Retained earnings $
- Total Net Worth $
- Total Liabilities and Total Net Worth $
(Total assets will always equal total
liabilities and total net worth)
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