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Introduction To Balance Sheets

This article is intended for users who want to gain an understanding of Balance Sheets and how to setup and use Balance Sheets.

Introduction

The Agrimaster balance sheet treats all data in the Agrimaster file as belonging to a single trader in much the same way as the cashbook, budgets and assets and liabilities module.

We are not producing accounting or tax reports, just an estimate for private use.

What Does A Balance Sheet Mean In Simple Terms?

A balance sheet is a snapshot of your business on a particular date. It lists all of your business' assets and liabilities. You can then find out what your net assets are at that time.

A balance sheet can also help you work out your:

  • Working capital – money needed to fund day-to-day operations.
  • Business liquidity – how quickly you could pay your current debt.

A Balance Sheet Is Made Up Of

Current Assets 

  • Cash
  • Chemical inventory 
  • Livestock 
  • Pre-paid expenses 

Fixed Assets

  • Leasehold 
  • Property & land 
  • Plant & machinery 
  • Building, fences & yards 
  • Vehicles 
  • Equipment & too;s 
  • Computer equipment 

Current/Short Term Liabilities

  • Credit cards payable 
  • Accounts payable 
  • Interest payable 
  • Accrued wages 
  • Income tax 

Long Term Liabilities  

  • Loans 
  • Chattel loans/HP 
Total Assets  Total Liabilities 

How Does Balance Sheet work?

Current Assets + Fixed Assets = Total Assets ($)

Current/Short Term Liabilities + Long Term Liabilities = Total Liabilities

Total Assets – Total Liabilities = Net Assets

 

Over time, some Assets go up in value (e.g. land) whilst other items go down (e.g. tractors). Some items vary in value over time (e.g. livestock) depending on various economic factors.

Based on your business rhythm, short term Liabilities will go up & down in value.

Initial Balance Sheet Setup

To produce a balance sheet report, the following Agrimaster features will need to be setup:

  1. Check your Bank Account Setup to ensure the accounts have been setup with the correct bank account Type; i.e. working account, term loan, lease, chattel mortgage.
  2. Setup Stock Control module, including allocations for commodity items.

  3. Asset Register

Note: The above features can also be used independently of the Balance Sheet. 

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