Free guide and arithmetic checker
Balance sheet not balancing? Check the difference before changing a figure.
Compare three totals from the same financial position. Then review the underlying records. A difference tells you that the totals disagree; it cannot identify the missing entry.
Assets = Liabilities + Equity
Check your balance sheet totals
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Use a decimal point and up to 3 decimal places. Commas separate thousands: 1,500 means one thousand five hundred. Arabic digits are accepted. Negative equity uses a leading minus sign.
The result shows direction only. Review the records below; do not add an invented loan, sale or asset to close the gap. Four areas to review with your records
Before comparing the totals
- Use balances at the reporting date, rather than total sales or expenses over the year.
- Keep the company, date, currency and units consistent across all three totals.
- Use total equity after the year’s profit or loss and owner movements have been reflected. Do not add the year’s profit twice.
- Accumulated losses may leave equity negative. Enter a leading minus sign when that is what your records show.
- A blank total is unknown, not zero. Enter zero only when you have checked it.
A worked example, not a proposed adjustment
Assets of 10,000, liabilities of 3,000 and equity of 5,000 give a difference of 2,000: assets are higher. These totals alone cannot show whether an asset is overstated, a liability is omitted or equity needs correction.
With assets of 1,000, liabilities of 3,000 and equity of −2,000, the equation matches. Negative equity is accepted by this checker.
Four areas to review with your records
Assets
Reconcile the bank and cash balances at the reporting date, inventory records and unpaid customer invoices. Review equipment at its net carrying amount; do not count both its cost and its net value as separate assets.
Liabilities
Check unpaid supplier invoices, accrued costs, customer advances and loan balances. Avoid counting the same borrowing twice in current and non-current totals. Confirm whether owner funding is a loan or an equity contribution from its documentation.
Equity and opening balances
Compare capital, opening retained earnings and reserves with the company’s records and prior statements. Check owner withdrawals separately from operating expenses. Confirm that accumulated losses carry the correct sign.
Period activity versus closing balances
Sales and expenses cover a period; assets and liabilities are balances at a date. Check for unpaid sales, unrecorded costs, duplicated figures and opening balances carried forward incorrectly.
What a zero difference does—and does not—establish
A zero difference establishes an arithmetic match between the three totals you entered. It does not establish that every transaction is recorded, classifications are correct, a report is complete, or an audit or filing requirement has been met. Three zeros also match mathematically.
Check the supporting records before making any adjustment, even if one amount equals the difference exactly. Ask your accountant when the correct treatment is uncertain.
Basis and source
The equation follows from equity representing what remains after liabilities are deducted from assets. See the IFRS Foundation’s Conceptual Framework, paragraph 4.63. This guide is an arithmetic aid, not a determination of your company’s accounting treatment.
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