Accounts Demystified, 7th Edition

2

Creating a balance sheet

• Procedure for creating a balance sheet
• SBL’s balance sheet
• The different forms of balance sheet
• Basic concepts of accounting
• Summary

Now you know what a balance sheet is and how to look at one as a chart, we’re ready to set about actually creating one. First, I’ll briefly describe the procedure and then we’ll build up SBL’s balance sheet step by step.

Procedure for creating a balance sheet

We create a balance sheet at a particular date by entering all the transactions the company has ever made up to that date and then making various adjustments:

• A transaction is anything that the company does which affects its financial position. This includes raising money from shareholders and banks, buying materials, paying staff, ...