Your businesses success is directly tied to accurate record keeping. Keeping an accurate balance sheet is the best way to make sure your Apex business’s assets and liabilities are accounted for. This is called a “Statement of Financial Position.” The balance sheet collects the company’s assets, liabilities and owner’s equity to determine liquidity and net worth at that time.
The balance sheet is a part of a company’s larger financial statement report.
All Apex businesses should strive to achieve the goal of increased assets. Follow the formula: Total assets = Total liabilities + Equity
Balance sheets require accurate record keeping to help manage the details of the company’s assets, liabilities and equity within a specific industry.
Assets are a company’s resources that have a measurable economic value.
2 categories for assets:
Liquid – Cash and/or items that can be easily sold and converted to cash
Non-liquid – assets not easily converted into cash
*intangible assets may be included in the asset log, but due to the nature of such assets, they are not easily valued. Speak with an experienced accountant for clarification on what is acceptable for your Apex business.
Liabilities are costs that are owed to creditors, stockholders, etc.
Categories of liabilities:
Current – Single year payoff
Long Term – Pay outside of a single year cycle
Equity is determined by deducting liabilities from assets. Now, the company can get a clear picture of the value of the business and determine their profit margin. If expenses exceed revenue, then the company has a low equity and vice versa.
The balance sheets are the best way to keep track of financial records that help a business and creditors understand the financial position at any point of time. This helps to determine a company’s ability to repay any debts that it incurs.
Absolutely! Anyone that has a financial stake in the company has a right to review the balance sheet. It is extremely common for banks and other lenders to request access to your business’s financial records to determine their risk for supporting a Apex business.
C.E. Thorn, CPA, PLLC has had over 30 years of experience providing small business support for Apex business owners. Our team of accountants understand the intricacies of keeping your business performing optimally. Speak with an experienced small business accountant in Apex by calling us at 919-420-0092 or completing the online contact form today.