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Balance Sheet Definitions

By: NPSIS.com :Jason Klein

The balance sheet also referred to as the statement of financial position, lists all the assets, liabilities, and owner's equity of a website hosting business as of a specific date. A balance sheet is divided into two parts, the top half deals with all the business' assets while the bottom lists its 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 MSN or other website marketing would be categorized under current liabilities.

3. Goodwill is often categorized as an Intangible. Goodwill is the intrinsic value of a business.

4. You can construct a balance sheet utilizing a free program named Calc from OpenOffice.org.

If you want to calculate the equity in a corporation, a straightforward way to determine that is to subtract all liabilities from the value of all assets. Another method is to total the liabilities and equity and the sum should be equal to the total of all assets. The two sections of the statement should be equal or balance.

Article Source: http://www.triplexarticles.com

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