Anatomy of the Balance Sheet
NPSIS.com :Jason Klein
The statement of financial position or balance sheet, records all the assets, liabilities, and owner's equity of a website hosting business as of a specific date. A balance sheet is typically segmented into two sections. The top section deals with the entire website hosting business' assets while the bottom section records the liabilities and equity.
A website hosting business' assets generally include everything the website hosting business owns that has any 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 are comprised of expenses and debts that the business has incurred such as the loans 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. Balance sheets can also contain a section which lists ownership equity.
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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