Contributed By

meredith.headshot copy

Meredith Wood

VP of Content and Editor-in-Chief at Fundera

View Profile

Your Accounting Balance Sheet: The Small Business Owner’s Guide

January 20, 2017

The accounting questions small business owners should be asking.

How much money did I make last year? That’s what a lot of business owners want to know right now—and for good reason.

As a bookkeeper, my answer when you ask me how much money you made will often be, “You’re asking the wrong question.”

Instead, the first question you ask should be: Is the accounting balance sheet accurate?

Making Sense of Your Accounting Balance Sheet

If your accounting balance sheet is not accurate, then your profit and loss is worthless. And by worthless, I mean, literally worthless. Whatever your profit and loss says you made this year is completely unreliable if your accounting balance sheet isn’t complete and accurate.

You make five “management assertions” when you present financial statements to someone:

1. Accuracy: Are all transactions recorded, and without errors? 

2. Classification: Is everything coded to the correct accounts? 

3. Completeness: Is anything missing/unrecorded?

4. Cutoff: Is everything recorded in the right period?

5. Occurrence: Did the transactions that were recorded actually take place?

I cannot tell you how much money you made until I’ve confirmed all of the above, and that requires a thorough review of your accounting balance sheet.

What is an Accurate Balance Sheet?

Your Accounting Balance Sheet is a snapshot. It’s a moment in time, and it answers one simple question at its foundation….

What is Your Company Worth?

Isn’t that a better question than how much money you made? You can make $1 million, and then you can spend $1.5 million and your company isn’t worth squat. I have no idea what “squat” is actually worth. In this case, I suppose it’s $500,000.

The balance sheet is broken up into three parts:

1. Assets: The things you own or have rights to collect (e.g., cash, accounts receivable, employee advances).

2. Liabilities: The things you owe or have obligations to pay (e.g., accounts payable, payroll liabilities, loans payable, customer deposits).

3. Equity: The book value of your business (assets – liabilities = equity).

The total equity at the bottom of your balance sheet is the book value of your business.

This article is available exclusively to
Comcast Business Community Members.

Join the Comcast Business Community to read this article
and get access to all the resources and features on the site.

It's free to sign up


Join the Discussion

300 Characters Left

To Comment either Register or Login:


To view the rules of engagement for commenting on Comcast Community click here



Resource Center

Why Comcast
Comcast Business delivers fast, reliable networking solutions built for business performance and growth

Current Offers
Take advantage of our limited time offers with a customized plan built to give your business an edge over competitors

Community Forums
Find solutions, share knowledge and get answers from customers and experts

Help & Support
Get help and support from Comcast experts

Resource Library
Find out how Comcast has helped clients like you meet their needs with informative White Papers, Case Studies and more

Internet Speed Test
Try the Comcast Business Internet Speed Test to see how your business stacks up

Social Media
Connect with Comcast and join the conversation on LinkedIn, Twitter, and Facebook

Take your business beyond

Fast is the nation's largest Gig-speed network. Beyond Fast is technology that helps business boom.
Learn more about Comcast Business solutions that can help your business perform better.