How To: To prepare your Balance Sheet, you’ll need to list all your assets, liabilities, and equity at a specific point in time.

Step 1: Choose Your Date. A Balance Sheet is always prepared for a specific date, like the end of a month or year.

Step 2: List and Categorize Your Assets.

• Identify everything your business owns.
• Separate them into Current Assets (cash, inventory, money owed to you by customers) and Non-Current Assets (equipment, furniture, vehicles).
• Example for Selamawit (as of Dec 31st, 2024):
  • Current Assets:
    • Cash in Bank: ETB 10,000
    • Inventory (stoves, briquettes): ETB 15,000
    • Accounts Receivable (customer owes her): ETB 2,000
    • Total Current Assets = ETB 27,000
  • Non-Current Assets:
    • Briquette Press Machine: ETB 25,000
    • Shop Furniture & Fixtures: ETB 5,000
    • Total Non-Current Assets = ETB 30,000
  • Total Assets = ETB 27,000 + ETB 30,000 = ETB 57,000

Step 3: List and Categorize Your Liabilities.

• Identify everything your business owes.
• Separate them into Current Liabilities (money owed to suppliers, short-term loans) and Non-Current Liabilities (long-term loans).
• Example for Selamawit (as of Dec 31st, 2024):
  • Current Liabilities:
    • Accounts Payable (owes supplier for stoves): ETB 5,000
    • Short-term Loan (from microfinance): ETB 3,000
    • Total Current Liabilities = ETB 8,000
  • Non-Current Liabilities:
    • Long-term Loan (for briquette machine): ETB 15,000
    • Total Non-Current Liabilities = ETB 15,000
  • Total Liabilities = ETB 8,000 + ETB 15,000 = ETB 23,000

Step 4: Calculate Your Equity.

• If you have initial capital and retained earnings, add them up.
• Example for Selamawit (as of Dec 31st, 2024):
  • Owner’s Equity (initial investment): ETB 22,000
  • Retained Earnings (from previous profit): ETB 12,000 (from our earlier example)
  • Total Equity = ETB 22,000 + ETB 12,000 = ETB 34,000

Step 5: Check if it Balances!

• Your Total Assets MUST equal your Total Liabilities + Total Equity.
• Example for Selamawit:
  • Total Assets = ETB 57,000
  • Total Liabilities + Equity = ETB 23,000 + ETB 34,000 = ETB 57,000
  • It balances! ETB 57,000=ETB 57,000