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A breakdown of the balance sheet, by small business accountants in Sydney

The balance sheet is one of the core financial statements that you would get from your bookkeeper or accountant as it provides you with information about all aspects of your business and is a snapshot of what you need to do or fix. Our small business accountants in Sydney will breakdown the balance sheet for you.

Always remember that you can ask your business accountant anything especially if you are unsure about the situation at hand. A balance sheet can be broken down in:

Assets: are divided into two different segments, long-term assets and current assets. Current assets can be easily turned into cash within a one-year period (accounts receivable and cash), while long-term assets take more than a year to turn into cash or are simply items that you have bought, also known as fixed assets (cars, machinery, shops etc.).

Liabilities: are similar to your assets with there being long-term liabilities and current liabilities, the only difference is that it is money owed to other people outside your business. Current liabilities can easily be paid off within one year (accounts payable, stock, rent etc.), while long-term liabilities take multiple years (mortgage, loans, machinery etc.).

Owner’s Equity: is the money a business owner has invested into his or her business, as well as any retained earnings that have been invested into the business.

Down the bottom of each statement there will be two figures, your Total Assets and your Total Liabilities and Owner’s Equity, these two figures need to be equal for your financial statement to be correct. If they are not, then something went wrong in the process, this is why it is always recommended you use a business accountant in Sydney for all aspects of your business.

Feel free to contact our small business accountants in Sydney with any questions you have about sorting out your balance sheet.

 
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