We can evaluate the balance sheet together with the income statement and cash statement by analysts and investors to assess the firm’s overall financial status. It is used to provide a thorough assessment of a company’s state of affairs. In this article, we will demonstrate the procedures of the format of the balance sheet of a partnership firm in Excel.
What Is a Balance Sheet?
The balance sheet contains corporate resources and obligations. It is a crucial financial report. Using a balance sheet, one may learn about a company’s financial health. A balance sheet provides insightful information about a company’s financial performance. Balance sheets enable comparisons across firms of the same kind since they often cover the same types of data. The fundamental formula Assets = Liabilities + Equity serves as the foundation for the balance sheet.
Step-by-Step Procedures to Create a Format of Balance Sheet of Partnership Firm in Excel
One of those words that might make an entrepreneur cringe is ‘Balance Sheet’. A balance sheet is a precise, numerical illustration of an important financial concept. Let’s follow the procedures to create a format of the balance sheet of the partnership firm in Excel.
Step 1: Make an Excel Document
First of all, we need to prepare our Excel file to create a format of the balance sheet of the partnership firm. To do this.
- We put two headings; the first one is the Balance Sheet of Partnership Firm which is in Heading 2. The second one is ABC & Company which is in Heading 3.
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Step 2: Insert Balance Sheet’s Contents
At this point, we have to insert all the necessary information in the Excel sheet. For this, we will need nine columns.
- Firstly, we put the Serial Number in column B. The serial number is a special identifying number.
- Secondly, we place the name of Name of Partners.
- Thirdly, the Profit Sharing Ratio. It is frequently used in partnership-style businesses. Simply put, this is how equally the partners split the company’s profits.
- Subsequently, insert the Opening Balance. The opening balance is the sum of money in a business’s credit at the start of a new fiscal year.
- After that, the Capita Introduction, which the majority of sizable brokerage companies provide as a part of their prime trading plan.
- Then, Remuneration is the overall pay an employee receives.
- Next, we will put the Share of Profit,
- Further, the Drawing is the process of withdrawing money out of a bank account or corporate assets for personal consumption.
- Finally, the Closing Balance.
- As you can see after putting all the contents, they do not show properly. To show them appropriately; select the whole row of the contents.
- Then, go to the Home tab from the ribbon.
- In the Alignment category, click on Wrap Text. This will adjust the weight and height.
- Now, suppose we want to change the alignment and put colors on all the contents. So, we again select the whole row and then go to the Home tab.
- Then, in the Alignment group, we select the Middle Align and the Align Left.
- Furthermore, in the Font group, we select the Fill Color (White, Background 1, Darker 5%).
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Step 3: Add Category Values
Now, we will add all the values of each category. After adding all the values we need to find the closing balance. For this,
- Select the cell where we want to put the result of the closing balance. In our case, we will choose cell J6.
- Then, insert the formula into that cell.
=E6+F6+G6+H6-I6- Press the Enter key from the keyboard.
- Drag the Fill Handle icon down to duplicate the formula over the range. Or, to AutoFill the range, double-click on the plus (+) symbol.
- Finally, we can see that the result of the closing balance will be shown in column J.
Read More: Balance Sheet Format of a Company in Excel
Step 4: Total of Importance from Balance Sheet of Partnership Firm
Lastly, we will calculate the total of the whole components of the balance sheet. To do this,
- Firstly, select cell E9 and then, press the Shift key on your keyboard and go up.
- Then, go to the Home tab from the ribbon.
- Click on the AutoSum feature, under the Editing group.
- Thus, you will see the result. Or you can use the SUM function in Excel. The SUM function is a built-in function, categorized under the Math/Trig Function. This adds each value in a range of cells before returning the total.
- So, select the second cell E9, and put the formula into that selected cell.
=SUM(E6:E8)- Hit the Enter key to see the outcome.
- After that, drag the Fill Handle icon to the right to copy the formula over the range. Or, double-click on the plus (+) sign. This also duplicates the formula.
- You can now see the result in the resulting rows. This is the format of the balance sheet of the partnership firm.
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Benefits of Balance Sheets
It maintains equilibrium in corporate affairs, as the name implies. According to accounting standards, all assets have to be equivalent to all liabilities and equity. Therefore, if they do not even balance, the financial procedure contains an error. Financial ratios are easier to calculate and analyze with the aid of a balance sheet. These ratios can also be used to compare the financial health of your business to that of your rivals. Receiving credit from financial institutions also benefits from an income statement. A balance sheet may also help an entrepreneur decide what to engage in.
Read More: Balance Sheet Format for Construction Company in Excel
A Balance Sheet’s Restrictions
On valuation, we brief asset documentation. However, those assets are of lower actual economic worth. As a result, the worth of the firm is distressed by these inflated resources. When we generate assets privately, they are frequently overlooked by balance sheets. Additionally, it disregards assets that are intangible and cannot be valued in money. These resources include a technological staff that cannot be replaced, internet sales platforms, devotion, sincerity, etcetera. The balance sheet lists some assets as estimations, which once again distorts the real economy of the company.
Download Practice Workbook
You can download the workbook and practice with them.
Conclusion
The above procedures will assist you in creating a Format of the Balance Sheet of the Partnership Firm in Excel. Hope this will help you! Please let us know in the comment section if you have any questions, suggestions, or feedback.
