Balance sheets

Contents of a balance sheet includes:

• fixed assets - long-term possessions
• current assets - short-term possessions
• current liabilities - what the business owes and must repay in the short term
• long-term liabilities - including owner's or shareholders' capital

The balance sheet is so-called because there is a debit entry and a credit entry for everything (but one entry may be to the profit and loss account), so the total value of the assets is always the same value as the total of the liabilities.

Download a basic balance sheet for limited companies to use and adapt (XLS, 33K).

1. Fixed assets include:

• tangible assets - eg buildings, land, machinery, computers, fixtures and fittings - shown at their depreciated or resale value where appropriate
• intangible assets - eg goodwill, intellectual property rights (such as patents, trade marks and website domain names) and long-term investments

2. Current assets are short-term assets whose value can fluctuate from day to day and can include:

• stock
• work in progress
• money owed by customers
• cash in hand or at the bank
• short-term investments
• pre-payments - eg advance rents

Find out more about the different types of business assets.

3. Current liabilities are amounts owing and due within one year. These include:

• money owed to suppliers
• short-term loans, overdrafts or other finance
• taxes due within the year - VAT, PAYE (Pay As You Earn) and National Insurance

4. Long-term liabilities include:

• creditors due after one year - the amounts due to be repaid in loans or financing after one year, eg bank or directors' loans, finance agreements
• capital and reserves - share capital and retained profits, after dividends (if your business is a limited company), or proprietors capital invested in business (if you are an unincorporated business)

Read more about the difference between assets and liabilities.