Preparation of a Complete Balance Sheet
The preparation of a complete balance sheet has three steps:
- Preparation of asset section of balance sheet
- Preparation of Liabilities and Owner’s Equity section of balance sheet
- Verification
Preparation of the Asset section of a Balance Sheet
- Center the word “Asset” on the first line of the statement.
- Enter the individual asset’s name on the next line.
- Enter individual asset’s account amount in the first column.
- Enter the phrase “Total Assets” in the line next to individual assets, leaving half an inch from the left side of the form.
- Draw a single line below the last asset amount balance.
- Record the total individual asset amount (add all individual asset amounts) in the second column.
- Center align the word “Liabilities” in the line next to total assets.
Preparation of the Liabilities and Owner’s Equity section of a Balance Sheet
- Record individual liabilities' account names.
- Enter the amounts of individual liabilities accounts in the first column.
- Draw a single line below the individual liabilities account amount in the first column.
- Enter the phrase “Total Liabilities” in the next line, leaving half an inch from the left side, below the last individual liability amount column.
- Enter the total in the second column by adding the individual liabilities account amount.
- Center “Owner’s Equity” in the line next to total liabilities.
- Enter individual Owner’s Equity account names on the left side of the form.
- Record the Owner’s Equity (or Capital) amount in the second amount column.
- Draw a double line below the total liability amount in the second amount column.
Verification
Follow these steps for verification of errors:
- Add the total liabilities amount and the ending capital balance which should equal the assets amount. If the totals are unequal, check for errors.
- Verify that each account balance has been transferred properly to trace any errors.
- Find and correct the error to complete the balance sheet.
- When the total assets equal total liabilities and Owner’s Equity, draw a double line below the total liabilities and owner’s equity amounts.
- This completes the balance sheet.