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The balance sheet in detail, explained by our Melbourne small business accountants

The balance sheet is a statement that our Melbourne small business accountants use to indicate the financial position of a business at a certain point in time. This means it reports what the business owns and owes through the terms assets, liabilities and equity. Our small business accounting services in Melbourne have detailed some of the important terms used when creating a balance sheet.

Current assets
These are resources that can be converted to cash or consumed within one year of the balance sheet. Examples that our small business accountants in Southbank come across regularly are inventories, accounts receivables and cash. Current assets are listed by liquidity which is the speed of which a resource can be converted to cash.

Current liabilities
An obligation that can be met or satisfied within one year. For example, accounts payable, monthly repayments and taxes.

Non-current assets
Resources that are used in an entity’s operation for more than one year and are not resold. For example, land, machinery and property.

Non-current liabilities
Obligations that cannot be paid within one year. For example, mortgages, bonds and debentures.

For more information on what is included in a balance sheet, please contact our Melbourne small business accountants today.