Thinking of the Balance Sheet as a Wallet

Non-bookkeepers tend to focus on income and expenses and ignore the Balance Sheet accounts (assets, liabilities, and equity). This can lead to all sorts of problems, like overdrawn bank accounts, unpaid bills, duplicated transactions, understated income, understated expenses, and more.

I find that it can be helpful to think of your Balance Sheet accounts as different pockets within the same wallet. This video walks you through the concept.


 

Illustration of an analog numeric typewriter, superimposed on a paper chart of printed numbers.

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The Basics of the Balance Sheet

Last week I laid out some of the basics of good Profit & Loss design. This week, the Balance Sheet, the P&L’s more obscure sibling. There’s a lot to delve into on a Balance Sheet, so this is just an introduction.

The Balance Sheet is less intuitive and more technical than the Profit & Loss, and it is the place where people are most likely to want or need the services of a professional.

Basics of Good Profit & Loss Report Design

Some of my favorite projects involve creating or overhauling a Chart of Accounts so that a client’s financial reports are easier to read. Here is a quick presentation of the principles of good design for the Profit & Loss accounts, and some examples of common pitfalls. Does your P&L look like one of the bad examples? I can help!


Illustration of an analog numeric typewriter, superimposed on a paper chart of printed numbers.

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If you find this content useful or interesting, send me a tip.

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