A short presentation on how to make a balance sheet. Presented as an assignment in Managerial Communication Course

1. How to
Prepare a
Balance
Sheet
Uday Jumle
PGP 2016-18
IIM Bangalore

2. “It sounds extraordinary but it's a fact
that balance sheets can make fascinating
reading.”
- Mary Archer

3. • Financial statement of a
company.
• What is Balance Sheet?
• It’s a statement which relates assets,
liabilities and shareholders equity.
Assets = Liabilities + Shareholders Equity

4. • Importance of Balance Sheets
Indication of financial standing of
company.
Qualification for taking additional
loans.
Gauge expected future returns.

5. • Calculate Assets : Sum of assets, investments,
money and product that company owns.
•Creating A Balance Sheet.
• Determine Liabilities : Liabilities include
operational cost, debt and material expenses.
• Evaluate Equity : Equity is calculated after
subtracting liability from assets. Revenue
generated by company increases equity.

6. Assets Liabilities
Equity
Assets Liabilities
Equity
+/- Net Income
+/- Valuation Changes
+ Capital contributions
Beginning Balance Sheet Ending Balance Sheet
• Example of Balance Sheet entry

7. Assets (In ₹ Millions)
Cash ₹126.00
Office ₹25.00
Accounts Receivable ₹3.78
Equipment ₹17.99
Prepaid Insurance ₹1.23
Total ₹174.00
Liabilities
Accounts Payable ₹78.11
Salaries Payable ₹12.78
Interest Payable ₹$1.20
Taxes Payable ₹$4.91
Total ₹97.00
Equity
Shareholders Equity ₹77.00
Total ₹77.00
• Example of Balance Sheet entry
Transaction : Paid ₹20,00,000 for services received in past.
Assets = Liabilities + Shareholders Equity
174.00= 97.00+77.00
(In ₹ Millions)
(In ₹ Millions)

8. Assets
Cash( 126.00-
2.00)
₹124.00
Office ₹25.00
Accounts
Receivable
₹3.78
Equipment ₹17.99
Prepaid Insurance ₹1.23
Total ₹172.00
Liabilities
Accounts
Payable(78.11-
2.00)
₹76.11
Salaries Payable ₹12.78
Interest Payable ₹$1.20
Taxes Payable ₹$4.91
Total ₹95.00
Equity
Shareholders
Equity
₹77.00
Total ₹77.00
• Example of Balance Sheet entry
Transaction : Paid ₹20,00,000 for services received in past.
Credit
Cash by
20,00,000
Debit Acc.
Payable by
20,00,000
Assets = Liabilities + Shareholders Equity
172.00= 95.00+77.00
(In ₹ Millions) (In ₹ Millions)
(In ₹ Millions)

9. • Exercise
Transaction 1:
Received ₹ 0.2 Million Cash ( Revenue) for services.
Transaction 2:
Received ₹ 0.18 Million for services provided in past.

10. Assets (In ₹ Millions)
Cash
( 126.00+0.20+0.18)
₹126.38
Office ₹25.00
Accounts
Receivable(3.78-
0.18)
₹3.60
Equipment ₹17.99
Prepaid Insurance ₹1.23
Total ₹174.20
Liabilities
Accounts Payable ₹78.11
Salaries Payable ₹12.78
Interest Payable ₹$1.20
Taxes Payable ₹$4.91
Total ₹97.00
Equity
Shareholders
Equity(77.00+0.20)
₹77.20
Total ₹77.20
• Example of Balance Sheet entry
Assets = Liabilities + Shareholders Equity
174.20= 97.00+77.20
(In ₹ Millions)
(In ₹ Millions)

12. Questions?