Companies in the United States usually choose between two common formats for their balance sheets: the Account format or the Report format. The actual line items appearing in both formats are the same; the only difference is the way in which you lay out the information on the page. A third option, the Financial Position format, is more commonly used in Europe.
Account format
The Account format is a two-column layout with Assets on one side and Liabilities and Equity on the other side. Using the Account format, here’s a sample balance sheet.
| Company X Balance Sheet As of May 31, 2011 |
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| Current Assets: | Current Liabilities: | ||
| Cash | $3,000 | Accounts Payable | $2,200 |
| Accounts Receivable | $1,000 | Total Current Liabilities | $2,200 |
| Inventory | $1,200 | Long-Term Liabilities: | |
| Total Current Assets | $5,200 | Loans Payable | $29,150 |
| Long-Term Assets: | Total Long-Term Liabilities | $29,150 | |
| Equipment | $5,050 | Equity: | |
| Furniture | $5,600 | Capital | $5,000 |
| Vehicles | $25,000 | Retained Earnings | $4,500 |
| Total Long-Term Assets | $35,650 | Total Equity | $9,500 |
| Total Assets | $40,850 | Total Liabilities & Equity | $40,850 |
Report format
The Report format is a one-column layout showing assets first, then liabilities, and then equity. Using the Report Format, here’s the balance sheet for Company X:
| Company X Balance Sheet As of May 31, 2011 |
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| Current Assets: | |||
| Cash | $3,000 | ||
| Accounts Receivable | $1,000 | ||
| Inventory | $1,200 | ||
| Total Current Assets | $5,200 | ||
| Long-Term Assets: | |||
| Equipment | $5,050 | ||
| Furniture | $5,600 | ||
| Vehicles | $25,000 | ||
| Total Long-Term Assets | $35,650 | ||
| Total Assets | $40,850 | ||
| Current Liabilities: | |||
| Accounts Payable | $2,200 | ||
| Total Current Liabilities | $2,200 | ||
| Long-Term Liabilities: | |||
| Loans Payable | $29,150 | ||
| Total Long-Term Liabilities | $29,150 | ||
| Equity: | |||
| Capital | $5,000 | ||
| Retained Earnings | $4,500 | ||
| Total Equity | $9,500 | ||
| Total Liabilities and Equity | $40,850 |
Financial Position format
The third type of balance sheet format, the Financial Position format, is rarely seen in the U.S., but is used commonly in the international markets, especially in Europe. This format doesn’t have an Equity section but includes two line items that don’t appear on the Account or Report formats:
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Working Capital: Calculated by subtracting current assets from current liabilities. It’s a quick test to see whether or not a company has the money on hand to pay bills.
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Net Assets: What’s left over for a company’s owners after all liabilities have been subtracted from total assets. (Note that Net Assets is the same number as Total Equity in the other two formats.)
Using the Financial Position format, here’s the balance sheet for Company X:
| Company X Balance Sheet As of May 31, 2011 |
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| Current Assets: | |||
| Cash | $3,000 | ||
| Accounts Receivable | $1,000 | ||
| Inventory | $1,200 | ||
| Total Current Assets | $5,200 | ||
| Current Liabilities: | |||
| Accounts Payable | $2,200 | ||
| Total Current Liabilities | $2,200 | ||
| Working Capital | $3,000 | ||
| Noncurrent Assets: | |||
| Equipment | $5,050 | ||
| Furniture | $5,600 | ||
| Vehicles | $25,000 | ||
| Plus Noncurrent Assets: | $35,650 | ||
| Total Assets less Current Liabilities | $38,650 | ||
| Long-Term Liabilities: | |||
| Loans Payable | $29,150 | ||
| Less Long-Term Liabilities | $29,150 | ||
| Net Assets | $9,500 |