Fuquay Varina Balance Sheets

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Balance sheets, sometimes called a statement of financial position, ensure your Fuquay Varina business’s assets and liabilities are accounted for. Part of your company’s larger financial report, balance sheets compile the company’s assets, liabilities, and the owner’s equity to determine the business’s current net worth.

The goal is to achieve the formula: Total assets = Total Liabilities + Equity

What Does a Balance Sheet Involve?

Balance sheets document the unique assets, liabilities, and equity of your business with the following information:

Assets

Assets are resources that have a measurable economic value and typically fall into one of two categories:

  • Liquid assets – Cash or items that can be easily sold/converted to cash.
  • Non-Liquid – Assets that cannot easily converted into cash.

Intangible assets may be included in your asset log, but due to their nature, they are not easily valued. At C.E. Thorn, CPA, PLLC, we can help clarify your intangible assets.

Examples of Small Business Assets

  • Cash
  • Investments
  • Accounts receivable
  • Inventory & supplies
  • Prepaid insurance
  • Land & buildings
  • Equipment

Liabilities

All businesses have operating costs or obligations. These costs are characterized as liabilities and are usually owed to creditors, stockholders, etc.

Liabilities fall into one of the following categories:

  • Current – Must be paid within a single year.
  • Long Term – May be paid off outside of a single year.

Examples of Small Business Liabilities

  • Accounts payable
  • Salaries/wages
  • Interest owed on loans, materials, etc.
  • Income tax
  • Loans

Equity

When you business’s liabilities are subtracted from your assets, you now have a clear picture of your equity, or the value of your company. The lower your expenses compared to your revenue, the higher your equity.

Why are Balance Sheets Important?

Balance sheets disclose financial records to creditors and provide a clear picture of the company’s financial position. If your business is looking to grow and you’d like a loan to help cover expenses, a bank or credit agency will use your balance sheet to determine if your company is qualified to repay new debts.

Who Reviews a Balance Sheet?

Anyone with a stake in your business may want to review your balance sheet. These people may include:

  • Current and potential investors
  • Banks and creditors
  • Government agencies
  • Company management and financial officers

Let C.E. Thorn, CPA, PLLC Prepare Your Small Business’s Balance Sheet

At C.E. Thorn, CPA, PLLC, we understand how important financial reports are to your small business. For nearly 30 years, we have provided professional accounting to small businesses in the Fuquay Varina area. Learn more about our small business accounting services and how we can help your business by calling 919-420-0092 or completing our online contact form today!
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