 Students are able to explain the components of a balance sheet and create a balance sheet.

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Presentation transcript:

 Students are able to explain the components of a balance sheet and create a balance sheet.

 The Balance Sheet shows the financial position of a business at a particular time. It’s a snapshot of all the assets and liabilities of a business at a particular point in time.

 The Balance Sheet is made of up three types of Accounts. 1. Assets 2. Liabilities 3. Equity

 Accountants usually prepare classified balance sheets - accounts are presented in distinct groupings, categories, or classifications.

Order on a Balance Sheet:  Current Assets  Non-current Assets  Current Liabilities  Non-current Liabilities  Equity

 The balance sheet can be prepared in two different formats. Harry P Styles Balance Sheet as at 30 June 2015 $ $ Current Assets Current Liabilities Cash at Bank110Accounts Payable600 Accounts Receivable700Bank Overdraft200 Stock of merchandise Non-Current Liabilities Non-Current Assets Bank loan1000 Vehicles4000Mortgage on premises15000 Premises TOTAL LIABILITIES16800 Equity Capital3810 TOTAL ASSETS20610

$ Current Assets Cash at bank110 Accounts Receivable700 Stock of merchandise800 Total Current Assets1610 Non-current Assets Vehicle4000 Premises15000 Total Non-current Assets19000 TOTAL ASSETS20,610 Current Liabilities Accounts Payable600 Bank Overdraft200 Total Current Liabilities800 Non-Current Liabilities Bank loan1000 Mortgage on premises15000 Total Non-Current Liabilities16000 TOTAL LIABILITIES16800 NET ASSETS*3810 Equity Capital2000 Add: Profit**1900 Less: Drawings***90 TOTAL EQUITY3810 Harry P Styles Balance Sheet as at 30 June 2015

 * NET ASSETS are the Total Assets less Total Liabilities.  **Profit is the total income less total expenses. You will be given this figure or be required to work it out from other sources.  ***Drawings are the amounts the owner has taken out of the business. This figure will also be provided to you.