Balance Sheet - Cash Basis report: options and information

The Balance Sheet report is one of the most important reports in Microsoft Office Accounting 2009. This report displays a statement or snapshot of the financial condition of the business at a specific time. It acts as a companion to the Profit and Loss report, which is a record of the financial transactions of the business over a period of time.

Note: This is the cash basis version of this report. For the accrual basis version, see the link under Related topics.

Open the report

  • On the Reports menu, point to Cash Basis, and then click Balance Sheet.

Report content

Information in this report includes a list of assets and liabilities. To compare your results to previous periods in dollar or percentage terms, and then view trends that evolve over time, do the following:

  • On the toolbar, click Modify Report, and then in the Modify Report pane, select the appropriate Columns options.

Change report basis or date range

To change the report basis for this report, do the following:

  • On the toolbar, click the arrow next to Report Basis, and then select Cash or Accrual.

To change the date range for this report, do the following:

  • On the toolbar, click the arrow next to As of or Date.

About Balance Sheet reports

In addition to Profit and Loss reports, Balance Sheet reports are the most common forms of report information that are required by outside lenders, such as banks and new vendors. The creditworthiness of the business is determined by the information that these reports provide. Detail from a Balance Sheet report can be used to determine the cash flow that is available to finance growth or repay debt.

A Balance Sheet report can help a business owner to quickly get an idea of the financial strength and capabilities of the business. It can also answer various questions that arise. Is the business positioned to expand? Can it handle the normal fluctuations of revenues and expenses? Should the business seek outside sources for additions to cash reserves?

Balance Sheet reports are commonly run at the end of accounting cycles, usually monthly or at the end of the fiscal year, and they are particularly useful when they are analyzed over time. Comparing reports on a monthly or yearly basis can reveal important information about business trends, such as the ability to collect sales revenues, how you manage the inventory, and your success in paying creditors.

A Balance Sheet report shows the company's financial status: what it owns (assets), what it owes (liabilities), and the owner's investment in the business (net worth or equity). In a Balance Sheet report, assets must always equal liabilities plus equity. In other words, what the business owns is equal to what it owes plus what the owner has invested in it.

The Balance Sheet report accounting equation (assets = liabilities + equity) reflects this:

  • Assets are organized by their liquidity. Liquidity is determined by a company's ability to convert an asset into cash. The faster cash can be generated, the more liquid an asset is. Assets are divided into current and long-term. Current assets fall into the normal operating cycle of the business, usually one fiscal year. In that time period, it is considered reasonable that cash used to purchase inventory for sale will be converted back to cash by collecting receivables from customers. These assets are usually listed in terms of liquidity and include cash, bank accounts, accounts receivables, and inventory. Long-term assets tend to be those assets that cannot be converted within one year and will include fixed assets (equipment, vehicles, or buildings) or notes receivables.

  • Liabilities are also organized according to the operating cycle. Amounts owed to creditors that have to be paid within a year are considered current and include accounts payables, taxes payable, short-term notes, customer prepayments, and the portion of long-term debt that is to be repaid in the subsequent year. They are usually listed in the order of when they are due. Liabilities that extend beyond the year time frame are described as long-term and include notes and mortgages.

  • Equity is made up of the initial investment in the business and any retained earnings from previous fiscal periods that have been reinvested in the business. Equity is on the same side of the Balance Sheet report equation as liabilities because investment is a source of cash to the company. Equity represents the residual assets of the company as if all liabilities were paid off on the date of the Balance Sheet report.

Related topics

Balance Sheet report: options and information

About cash basis and accrual basis accounting

Working with reports

Report filter options: Balance Sheet

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