Balance Sheet report
This article explains what a balance sheet is and where to find it in FreeAgent. It also explains how to view items on the report, how to filter the report and use the ‘Comparative’ view so you see only the figures you need.
Your FreeAgent balance sheet shows you everything that your business owns (fixed and current assets) and everything that it owes (current and long-term liabilities) at a given moment in time.
FreeAgent will handle all the double entry bookkeeping of the transactions you enter during the year, such as creating bills, invoices and out-of-pocket expenses, or explaining bank transactions, so that your balance sheet should always balance.
If you want to, you can add new accounting categories.
Accessing the Balance Sheet report
Navigate to the ‘Accounting’ tab at the top of the screen and select ‘Reports’ from the drop-down menu.
In the ‘High Level’ section, select ‘Balance Sheet'.
Capital assets
Assets might be large items such as the business's machinery, computers and cars. These are sometimes called fixed assets or capital assets.
Current assets
The rest of your business’s assets may look a bit different depending on which method your business is using to draw up its accounts.
Traditional (accruals) basis of accounting
If your business is using the traditional (accruals) basis of accounting, then its assets would also include money the business holds in its bank and cash accounts, money tied up in stock that it owns, and money owed to the business, perhaps by customers who haven't yet paid their invoices. These assets are called current assets. Money owed by customers who haven't yet paid is also known as accounts receivable, or trade debtors.
Cash basis of accounting
If your business is drawing up its accounts based on when money physically changed hands, then its assets would also include money it holds in its bank and cash accounts, and money due from customers who haven’t paid yet. Money owed by customers who haven't yet paid is also known as accounts receivable, or trade debtors.
Using the cash basis of accounting, you would also see under current assets any deferred costs, which are bills that the business hasn’t yet paid for. These costs are classed as assets when using the cash basis, as the business will benefit from goods or services relating to these costs at a later point in time.
Liabilities
Liabilities are divided into long-term and current liabilities.
Traditional (accruals) basis of accounting
For a business using the traditional (accruals) basis of accounting, short-term liabilities may include money that the business will have to pay out soon, such as money owed to staff, or to HMRC for VAT or PAYE. Another short-term liability is money that the business owes to its suppliers for unpaid bills. This is also known as accounts payable, or trade creditors.
Cash basis of accounting
For a business using the cash basis of accounting, short-term liabilities may include money due to suppliers for unpaid bills, and/or to HMRC for VAT, as well as deferred income, which is the total of invoices that the business hasn’t yet been paid for. These unpaid invoices are classed as liabilities when using the cash basis, as this income has not yet been received by the business.
Long-term liabilities will usually fall due for payment in more than a year's time. This might include part of some bank loans, or hire purchase deals.
Capital
The balance sheet also shows the amount of capital that the owners have put into the business.
If you have a sole trader or partnership account, this will be represented by actual money invested.
For limited companies, capital is represented by purchased shares. Companies also show on the balance sheet reserves of profit that has been made in previous years.
Viewing details on the balance sheet
If you need to see the details of what makes up any of the figures on the balance sheet, select the figure.
This will display a list of the transactions that it includes.
How to filter the balance sheet
A balance sheet is always shown as at a given date, because it shows the balances of what the business owns and owes at that date. You can choose whether you want to view your Balance Sheet for a specific month, quarter, year or compare two different periods using the tabs at the top of the report.
You can also filter the balance sheet by date using the drop-down menu at the top of the page.
You can check the figures for the year so far by selecting ‘Today’ from the drop-down menu or you can see the balances as at a previous year end by selecting 'As at [X]'. You can also select ‘Opening balances’ from the drop-down menu. The opening balance view is useful when you are making sure you have entered all your opening balances correctly.
To select a specific date for the balance sheet, choose ‘Custom date’ from the drop-down menu, select the date and choose ‘Apply’.
The balance sheet will show the correct figures for that date, and if you choose to view any individual items on the report, the date filter will continue to apply.
How to use the Comparative Balance Sheet view
Select the ‘Comparative’ tab on the Balance Sheet report and choose two periods that you want to compare. You can compare two different quarterly or annual reports side-by-side, or you can view a custom date range.
The ‘Difference’ column shows the financial difference between period 1 and period 2.
The ‘Percentage change’ column shows the financial difference as a percentage. The arrow indicates if the difference has increased (arrow pointing upwards) or decreased (arrow pointing downwards).
Exporting the balance sheet report
You can export the balance sheet report as either a CSV or PDF file. To do this, select ‘Export Report’ in the top-right of the screen and choose the appropriate format from the drop-down menu.