![]() For instance, if you pay six months of insurance premiums in advance, they’ll initially be shown as a prepaid expense. Prepaid expenses: These amounts represent the value of expenses that have already been paid for, but not yet used.Inventory is shown on the balance sheet at the lower of the cost or market price. This includes materials that will be used to manufacture items to sell. Inventory: Inventory includes any assets that are owned with the intention of selling them to customers.Open invoices might be reduced by an allowance for doubtful accounts, which is an estimate of what customers will never pay. Accounts receivable (A/R): A/R refers to open invoices that customers are yet to pay.Marketable securities are generally shown on the balance sheet at their original cost or current value, whichever is lower. Marketable securities: This includes both equity and debt securities owned for which there’s a liquid market and the business expects to sell them within one year.Cash and cash equivalents: This is the most liquid of assets and can include currency, checks, treasury bills, and short-term certificates of deposit (CDs).They’re broken down further on the balance sheet by the following categories: Current AssetsĬurrent assets can easily be converted to cash within a year or less. There are three main categories of assets on your balance sheet: current assets, fixed assets, and other assets. The assets section of your balance sheet breaks down what your business owns of value that can be converted into cash within a year or less. ![]() Owner’s equity is the difference between assets and liabilities. Essentially, assets are any items that your business owns, and liabilities are amounts your business owes. There are three major components of a balance sheet: assets, liabilities, and owner’s equity. Read our best small business accounting software guide to know more. You can generate a balance sheet in seconds with the right accounting software. Sample balance sheet from QuickBooks Online
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