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Components of a Balance Sheet

Apr 29, 2008
The balance sheet which is also referred to as the statement of financial position, lists all the assets, liabilities, and owner's equity of a business as of a specific date. A balance sheet is divided in half. The top section deals with all the company's assets while the bottom section lists liabilities along with the equity.

A website hosting business' assets typically include everything that the website host has can be assigned a monetary value. The assets are broken down into categories based how liquid the asset is and how fast it can be sold and converted to cash. Current assets are those assets which can be converted to cash within one year.

Website hosting company liabilities consist of expenses and debts that the business has incurred such as the interest from the financing for database software such as PHP, mysql or Microsoft SQL or for new updated hardware such as dedicated servers or for the lease payments for a office or datacenter.

1. The dedicated servers mentioned earlier are assets of the web host whereas the debt owed for their purchase is a liability.

2. Accounts payable such as advertising with Google Adwords or other website marketing would be categorized under current liabilities.

3. Liabilities should also account for revenue rthat is received for prepaid services.

4. A free program named Calc from OpenOffice.org can be configured to provide the data for a balance sheet.

If you want to determine the equity in a company a simple method to determine that is to subtract all liabilities from the value of all assets. The formula of adding all liabilities plus the equity should be equal to the total of all assets. The two sections of the statement should be equal or balance.
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