Using QuickBooks accounting software you can be up-to-date on all the financial information of your business. Financial statements include profit and loss statements, balance sheets, statements of cash flows. This Financial statement will help you to keep a track of your business opportunities and the areas of improvement. QuickBooks produces this financial statement as the Quickbooks Balance Sheet. This Quickbooks Balance Sheet provides information about your organization’s assets, liabilities, and owner contributions of capital at a particular point in time.
Balance sheets play an important role for accountants to see your financial health and for banks when you are applying for loans. It also plays a pivotal role for small business owners to understand the ground truth of how their business is doing. You can use Quickbooks Online Balance Sheet for planning your year ahead or while applying for a credit card or bank loan.
In this blog, you will be introduced to QuickBooks, Balance Sheet, and its characteristics and importance. You will get to know the different types and components of a Balance sheet. The working of the QuickBooks Balance Sheet will be discussed in detail with all the options available.
Table of Contents
- What is QuickBooks?
- What is a Balance Sheet?
- Why Is the Balance Sheet Important?
- Types of Balance Sheets
- Components of the Balance Sheet
- Working with QuickBooks Balance Sheet
What is QuickBooks?
QuickBooks is a fantastic Accounting Program. It helps small and medium-sized enterprises keep track of their finances and manage their income and expenses. It can be used to keep track of financial transactions, handle invoices, pay bills, create reports, and file taxes. This program will help you keep track of your customers, vendors, clients, inventory, and finances.
You can use the Report Center to keep track of Sales, Income, Costs, and Overall Business Growth. Sales Tax Calculation, Product Tracking, and automatically updating transactions in your register, customer, and vendor sections are just a few of the tasks that QuickBooks automates. On-Premises and Cloud-Based versions of Quickbooks are available.
What is a Balance Sheet?
Balance Sheet is a financial summary of your company at the end of a certain period. This Balance sheet includes both what your company owns known as the company’s assets and what your company owes known as the company’s liabilities. Assets consist of cash, bank accounts, accounts receivable, investments, inventory, buildings, and equipment. The asset value represented in the Balance Sheet is known as book value which often varies from the actual market value of the asset. Liabilities include things like credit card debt, car loans, accounts payable, and mortgages. The final section of the Balance Sheet has the equity which is the difference between assets and liabilities.
General Characteristics of Balance Sheet
Balance Sheets work on this basic accounting principle that assets equal liabilities plus equity. Though companies customize the data based on individual preferences, generally they include cash, accounts receivable, fixed assets, and accounts payable, among others. The Balance Sheet is mainly used to show owners, investors, and creditors the business’s ability to meet debt obligations by detailing current liquidity. Balance Sheets act like a financial report card portraying areas where the business is prospering and areas that need improving.
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Why Is the Balance Sheet Important?
The Balance Sheet reveals the net worth of your business and hence it is considered to be more important. Though the assets do not represent fair market value, they still provide considerable information about your business worth. This helps to determine your company’s market value. The net worth of your company can be determined from this Balance sheet by subtracting the value of liabilities from the estimated fair market value.
Types of Balance Sheets
Balance sheets are used to understand the assets and liabilities of your business at a particular date. The type of balance sheet varies from time to time depending upon what the company wants to report. The types of balance sheets are:
- Report type Balance Sheets
- Account type Balance Sheets
- Comparative Balance Sheets
- Classified Balance Sheets
- Unclassified Balance Sheets
Report type Balance Sheets
In the report format of the Balance Sheet, the assets of the business are listed then followed by the liabilities and equity. In some cases of the report format, liabilities are subtracted from the assets and the bottom line of the data lists the equity.
Account type Balance Sheets
Basic forms of the Balance Sheet in the account type will have a list of assets on the left side and the liabilities and equity on the right side. When the accounts are balanced, the total of these columns at the bottom will be equal.
Comparative Balance Sheets
A comparative Balance Sheet is the most popular type of Balance Sheet. This is used to evaluate account balances of more than one point together. These comparative Balance Sheets make the evaluation easier. When you want to compare the account information for three years, the end-of-year balances are placed side-by-side for better evaluation. This type of Balance Sheet helps in understanding the increase or decrease in a company’s net worth.
Classified Balance Sheets
In the classified Balance Sheet, the accounts are split into subcategories. In the case of assets, it will be subdivided into fixed assets such as real estate and equipment, intangible assets such as patents and copyrights, and finally current assets such as cash and accounts receivable
Unclassified Balance Sheets
Unclassified Balance Sheets do not have these sub-divisions. In this type of Balance Sheet, major assets are listed by liquidity with cash first, then listing of liabilities with current accounts payable first and subsequent liabilities ordered by due dates.
Components of the Balance Sheet
The three basic components of the Balance Sheet are:
The below image is a sample Balance Sheet showing these three sections.
The items that your company owns and the amount that people owe you are termed as Assets. The term Accounts Receivable are defined as the invoices that you are waiting for payment from your customers. In this context, the term Undeposited Funds is a clearing account used to group checks into a single bank deposit. The buildings and equipment owned by your company come under Fixed Assets.
The amounts that you owe your vendors and creditors are termed Liabilities. Accounts Payable are outstanding invoices that you owe your vendors. Any equipment financing that the company is obligated to pay will come under Liabilities.
QuickBooks Balance Sheet creates an entry to Open Bal Equity while creating new accounts with an initial balance. This generally occurs when you first set up your company, and the amount in Opening Bal Equity will not change after the initial setup.
The accumulation of profits within your company is the Retained Earnings. This value on your QuickBooks Online Balance Sheet is the balance at the beginning of the reporting period. The Retained Earnings on your next Balance Sheet Quickbooks Online will be Retained Earnings from this QuickBooks Balance Sheet, plus Net Income from this QuickBooks Balance Sheet, less any owner distributions.
Net income shown on your QuickBooks Online Balance Sheet must match the net income from your Profit and Loss Report for the same reporting period.
Working with QuickBooks Balance Sheet
Using these four steps, you can run a QuickBooks Balance Sheet:
- In the left menu, click Reports, and then In the Business overview section, select Balance Sheet.
- View and change options for the QuickBooks Balance Sheet by scrolling up.
- Choose Customize to customize the QuickBooks Balance Sheet.
- Select an icon in the upper right corner of the report to Email, print, or export the Balance Sheet.
1. Create a New QuickBooks Balance Sheet
To create a new QuickBooks Balance Sheet, select Reports in the left menu bar and then click on Balance Sheet under the Business overview section.
2. Set Options for the QuickBooks Balance Sheet Report
Now, scroll up from the QuickBooks Balance Sheet to access basic options that can be altered for your report.
To apply all your changes made in the Quickbooks Balance Sheet, click Run report.
Here are some basic options in the QuickBooks Balance Sheet Report:
- Report period: In this drop-down, select the period of time for which you are preparing financial statements. You can either choose a given period of time or enter the dates of commencement and end for a custom period.
- Display columns by: Quickbooks Balance Sheet will have only a single column for the balances at the end by default. Balance Sheet Quickbooks Online also provides you an option to choose additional columns for interim balances, such as quarterly. For this, select from the drop-down box. Additional columns can also be added to separate the balances by the customers, vendors, classes, locations, or other categories.
- Show nonzero or active only: Quickbooks Balance Sheet avoids unnecessary clutter by showing only rows and columns that have activity during the period by default.
- Compare another period: Quickbooks Online Balance Sheet provides you an option to compare the balance sheets across different periods. Prior period Balance Sheet balances can be added in a new column for comparison purposes. An additional column showing the difference between the current and prior periods can also be added. This can be in either a dollar or percentage change.
- Accounting method: In Quickbooks Balance Sheet, you can choose if the Balance needs to be prepared on the cash or accrual basis of accounting. Accrual accounting includes accounts payable and accounts receivable.
- Run report: To apply all your changes, click Run report.
- Customize: To customize your Quickbooks Balance Sheet, click Customize.
- Save Customization: In Quickbooks Balance Sheet, you can save all your customizations and name your report to save your Quickbooks Balance Sheet settings. This customized Quickbooks Online Balance Sheet can be selected from the Reports tab.
3. Quickbooks Balance Sheet Customization
You can also customize your Balance Sheet Quickbooks Online by selecting the Customize button. The Customize report screen has four sections:
This is the first section in the Customize report. In this General section, the Report period and Accounting methods are one and the same options. So any change made in one should reflect in the other one. In this section, you can report numbers in thousands of dollars, omit cents from your Balance Sheet, and choose a format for negative numbers.
Using the Rows/Columns option, you can select columns that you want to include. You can also change the order of the columns. The percentage of column option helps to analyze how your total assets are allocated among each asset account. You can reorder the columns by first selecting them and then clicking and dragging them up or down.
You can filter the Quickbooks Balance Sheet by five variables. Running a Balance Sheet Quickbooks Online by location, customer, vendor, class, product/service will serve your purpose.
In Quickbooks Balance Sheet, you can also choose the information that you want to display in the header and footer of the Quickbooks Balance Sheet. You can place a checkmark next to any field you wish to appear on the Quickbooks Balance Sheet. The company name or report name in the header can be changed.
After all the customization of the Quickbooks Balance sheet, click the green Run Report button at the bottom of the list of customization options.
4. Export Quickbooks Balance Sheet
You can print, email, or export your Balance Sheet Quickbooks Online using the top corner icons of the Quickbooks Balance Sheet report. The following can be done to export, print, or mail a Quickbooks Balance Sheet report:
- Email a PDF of your Quickbooks Balance Sheet by clicking on the Email icon.
- Print a copy of your Quickbooks Balance Sheet report by clicking on the printer icon.
- Export a PDF file or an Excel spreadsheet by clicking the drop-down arrow next to the export icon.
From this blog, you have learnt about QuickBooks, Balance Sheet, and its characteristics and importance. The different types and components of a Balance Sheet will be clear to you now. The working of the QuickBooks Balance Sheet with all the options would have solved your purpose of this read. You can now work with QuickBooks Balance Sheet easily by following all these steps.
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