Balance Sheet
A balance sheet is a statement of the financial position of a business on a particular date. It lists what the business owns (assets), what it owes (liabilities) and the owner's interest (capital or equity). The fundamental equation is Assets = Liabilities + Owner's Equity, which is why both sides must always tally.
Groups used in this tool
- Owner's Funds: opening capital, add net profit, less drawings (or share capital and reserves for a company).
- Non-Current Liabilities: term loans, long-term borrowings, deposits repayable after 12 months.
- Current Liabilities: sundry creditors, outstanding expenses, GST/TDS payable, short-term loans, bank overdraft.
- Non-Current Assets: land, building, plant, furniture, vehicles (net of depreciation), long-term investments.
- Current Assets: closing stock, debtors, cash, bank, prepaid expenses, advances.
How this tool works
Fill the five groups with line items. The tool totals each group, compares Total Assets with Total Equity & Liabilities, shows the difference if any, and computes working capital, current ratio and debt-equity ratio. The statement is rendered in a clean vertical format (as per Schedule III style) and can be downloaded as PDF or Excel.
Worked example
Capital ₹8,00,000 + profit ₹2,65,000 − drawings ₹1,20,000 = ₹9,45,000; term loan ₹3,50,000; creditors ₹2,15,000, outstanding expenses ₹18,000, GST payable ₹32,000 → total ₹15,60,000. Assets: building ₹6,50,000, machinery ₹2,80,000, furniture ₹95,000, stock ₹1,80,000, debtors ₹2,40,000, cash ₹25,000, bank ₹90,000 → total ₹15,60,000. The sheet tallies; working capital is ₹2,70,000 and current ratio 2.02:1.
Ratios shown
Working capital = current assets − current liabilities indicates day-to-day liquidity. Current ratio above 1.33 is comfortable for bank finance. Debt-equity below 2:1 is generally acceptable. These appear in the summary cards automatically.
If it does not tally
Common reasons: net profit from the P&L not added to capital, closing stock omitted, depreciation deducted in P&L but not from the asset, drawings missed, or a liability entered as an asset. The tool's note suggests where to look based on the sign of the difference.
Frequently Asked Questions
Why must a balance sheet balance?
Every asset is financed either by the owner (capital) or by outsiders (liabilities), so total assets always equal total claims against them.
Where does net profit go?
It is added to the owner's capital under Owner's Funds; a net loss is deducted.
Should I show assets at cost or written-down value?
Show the net book value (cost less accumulated depreciation). The Fixed Asset Register tool computes WDV for you.
Is this format valid for a company?
Companies must follow Schedule III of the Companies Act 2013; this tool follows the same vertical grouping and is suitable for a quick draft.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.