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Sage Master Builder: The Balance Sheet

January 27th, 2009 · No Comments

Some websites are better than others. 

Here’s one I’ve found that is really helpful:


Mission Development

Sage Master Builder Software Consulting & Financial Resources


See their list of informative ARTICLES on left side of their Home Page.


The 4-Article Series called “The Balance Sheet” helps to explain what is, and how to use, this valuable accounting tool in our Master Builder arsenal.


The Balance Sheet, Part 1


The Balance Sheet is a statement of the business financial situation.  It is a statement of what the company owns and what the company owes right now.  It is not an Income Statement or Profit and Loss Statement (P&L), which is a statement which shows income and expenses over a year.


The Balance Sheet is Assets (money or property owned by the company or owed to the company), Liabilities (what the company owes) and Equity (difference between assets and liabilities).  Equity includes Retained Earnings, which is the total profits the company has made over the company’s lifetime, less money paid to the owner(s) in the in dividends or withdrawals.


Master Builder uses Accrual Accounting.  This gives a correct picture of the company’s financial state.  What this means is that income appears on the Income Statement when it is earned, not when it is received.  Expenses are shown when they are incurred, not when they are paid.  This provides financial statements that accurately reflect the company’s business activity and stability.


What is the Balance Sheet?


The Balance Sheet is one of the most important financial documents that any accounting system can produce. While the Income Statement details net profit for a specific time period, usually a year, the Balance Sheet is a sample of the company’s financial situation at a specific time.


When looking at the company’s financial statements, you’ll see the Income Statement has a title like “for 6 Months ending June 30, 2008”. The Balance Sheet for the same time period is probably titled “as of June 30, 2008”. So the Balance Sheet is based on a point in time: what the company owns and owes as of a specific date.  The Income Statement shows a period of time: what the company earned and spent over a specific period of time.

The Balance Sheet has three sections: Assets, Liabilities, and Equity.


To see more, go to:


Tags: Helpful Tips · Notes from Jim · Sage Master Builder

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