Balance Sheet

The balance sheet is one of the core financial statements used by the accountants. Financial statement that summarises a company’s assets, liabilities and shareholder’s equity at a given point in time. It gives owners an idea as to what the company owns and owes.

To access Balance sheet, navigate to the Financial Management module and click the Balance sheet tab.

The report generated is based on the current fiscal year. This will display amounts till the present posted transaction.

You can use the filters and calendar tool to drill down the balance sheet and know the company’s financial position at any point in time or as opposed to a given period. The balance sheet is divided in to two columns, one is for assets and the other is for liabilities and stockholders’ equity. Fundamentally, the balance sheet must balance the total amount of assets with the total amount of liabilities and stockholders’ equity.

The balance sheet is auto-calculated using the latest data from the company’s accounts, which means the balance sheet is created in real time. With Aqxolt ERP’s balance sheet, you don’t have to be a professional to do manual calculations. Whenever a transaction record is created, all the calculations and finance general entries are created automatically, eliminating errors in the balance sheet.

View the data that matters to you by using the filters provided to you. You can import the balance sheet for the selected organisation and duration in PDF format by clicking “Download PDF”. To make good decisions by comparing financial data, click “Compare Financial Data”. Compare the data of your interest by using filter criteria and viewing the chart data annually, quarterly and monthly. View and download the tabular data by clicking “Download PDF” for the financial year.

Let’s drill down the balance sheet closely. Depending on the nature of the business, the asset side of the balance sheet may contain many items, some of the examples includes Cash, Inventory, Accounts, receivable, Checking etc.,

The basic equation of the balance sheet states that the liability and the owner’s equity of a business are equal to the total sum of its assets.

Assets = Liabilities + Owner Equity

The other side of the balance sheet displays liabilities and stockholders’equity. Liabilities are obligations and debt payable to the other entity. Some of the examples of liabilities includes Sales tax, Accounts payable, Sales tax payable, Goods received not invoiced etc.,

Equity is the value of company’s capital. The basic equation of assets can be used to calculate the owners’ equity

Owners’ Equity = Liabilities – Assets

If the equation returns negative value then it is dangerous to the growth of your business and difficult to secure the finance of the company. Some of the examples of equity includes Retained earnings, Owners’ equity, Remuneration etc.,

Let’s illustrate an example to understand balance sheet. One of the customers in Universal stores purchases Phone and its selling price is $1200 and the cost price is $900. The system generates a sales order for the customer with the invoice amount $1200. The profit made by Universal store is calculated using the following equation.

Profit = Selling Price – Cost Price

Therefore, the profit made by Universal Store is $300.

The sales order summary is illustrated in the table below

Sales order SO-xxxx Customer: Serah
Qty Unit Price Total Price
1 1200 1200
Tax (20%) 240
Sub Total 1440
Discount (10%) 144
Total Amount 1296

 

The payments on the balance sheet are recorded only when the invoice is posted.

When we make a sale, and Post the Invoice
Chart of Account Credit Debit
Sales 1200
Accounts Receivable 1296
Sales Tax Payable 240
Sales Discount 144
1440 1440
Balance After Sale
Sales 1200
Accounts Receivable(Mckinsey) 1296
Sales Tax Payable 240
Sales Discount 144

Customer Serah makes the payment against the Invoice

Serah Pays to Invoice Amount
Invoice Amount 1296
Cash Payment 1296
Sales Order Status Paid
Sales Order Stage Shipped

 

When customer makes payment (Cash) to Invoice
Chart of Account Credit Debit
Accounts Receivable (Serah) 1296
Cash 1296 

 

Balance After Customer Payment Against Invoice
Sales 1200
Accounts Receivable (Serah) 0
Sales Tax Payable 240
Sales Discount 144
Cash 1296

Let’s illustrate an example to understand balance sheet when sales return happens. Serah the customer of Universal Stores would like to return one of the items from the sales order purchased by her. The system generates a Return Merchandise Authorisation for the customer and the net sales is calculated by the following formula.

Net Sales Formulae = Sales – (Sales Return + Sales Discount)

When a sale Return
Chart of Account Credit Debit
Sales Return 1200
Sales Discount 144
Cash 1296
Sales Tax Payable 240
1440 1440

 

Balance After Sales Return
Sales 1200
Accounts Receivable (Serah) 0
Sales Tax Payable 0
Sales Discount 0
Cash 0
Sales Return 1200

Similarly, let’s illustrate an example understand balance sheet when Universal stores purchases an item. Aqxolt ERP helps in accounting of vendor invoices that the vendor bills towards the order. When the user raises the Purchase order to purchase item A and item B, the system creates a voucher against the purchase order. Every time a voucher is posted a general ledger entry is created in the system reflecting the credit and debit balance of the chart of accounts created for purchases.

Inventory
Product Name Serial No Cost Price Selling Price Profit(SP-CP) Available Stock Stock Inward
Item A 2345-5436-2356 78000 90000 12000 2 2
Item B 2345-5436-2378 88000 100000 12000 2 2

 

After Voucher is Posted the Following Ledger Entries Will be Created
COA Credit Debit
Purchase 332000
Accounts Payable 332000

 

Inventory Accounting
COA Balance
Inventory 332000
Accounts payable 332000
Accounts Receivable 0
Sales 0
Purchase 0
Sales Return 0
Sales Tax 0

 

After Stock In Ward (Item A (2345-5436-2356)) is Posted The Following Ledger Entries Will be Created
COA Credit Debit
Inventory 156000
Purchase 156000

 

After Stock In Ward (Item B (2345-5436-2378)) is Posted The Following Ledger Entries Will be Created
COA Credit Debit
Inventory 176000
Purchase 176000

When an Universal store returns an item purchased the system creates a transaction entry for the return purchase order and the following chart of accounts are affected.

The Following Ledger Entries Will be Created If Not paid
COA Credit Debit
Accounts payable 0 88000
Inventory 88000 0

 

The Following Ledger Entries Will be Created If Paid with Cash
COA Credit Debit
Cash 88000  

 

PurchaseReturn 88000

 

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