Chapter 2 The Balance Sheet Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Accounting Equation A = Take a piece of paper and write down how . Example: Cash - $80 Savings - 2,000 Laptop - 1,400 etc. On the same piece of paper write down how . Owed to mom - $20 Internet bill - 45 Phone bill - 60 Presentation Title runs here l 00/00/00

The Accounting Equation A = L + OE How to remember this equation?!?!? Aloe Vera Assets = Things you own Liabilities = Owner’s Equity = Your net worth Presentation Title runs here l 00/00/00

Practice Time! Work with a partner if you like! Page 20 in your textbook. Complete exercises 1 – 6  Presentation Title runs here l 00/00/00 This Photo by Unknown Author is licensed under CC BY-NC

The Balance Sheet What is it used for? Definition: A balance sheet is a statement showing the financial position of a person, business or other organization. Structure: A = L + OE  Assets appear on the left side, Liabilities and owner’s equity appear on the right side Three line heading: Who?  Business Name What?  The Balance Sheet When?  Year End Date Assets are listed in order of their . WHAT DOES THAT MEAN?? Presentation Title runs here l 00/00/00

The Balance Sheet What is it used for? Definition: A balance sheet is a statement showing the financial position of a person, business or other organization. Structure (continued): Liabilities are generally listed in the order in which they are paid Financial details of all items are fully disclosed The two final totals (Total Assets and Total Liabilities and Equity) are underlined with a double line. Presentation Title runs here l 00/00/00

The Balance Sheet 1. Write the heading: Who Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 1. Write the heading: Who, What Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 1. Write the heading: Who, What, When. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 2. Under the Assets subheading, list all assets in order of liquidity. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 3. Under the Liabilities subheading, list all liabilities in the order they are due. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 4. Subheadings with more than one item must be totalled. Total the liabilities with a ruled line above the total. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 5. Under the Owner’s Equity subheading, record the Capital amount. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 6. Calculate total assets and total liabilities and owner’s equity. They should match. Include a ruled line above the totals. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 7. Put two ruled lines below the two totals. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

The Balance Sheet 8. Add dollar signs to the first number in each column, the total assets, and the total liabilities and equity. Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

Accounts Receivable vs. Accounts Payable A/R  Debts of customers owed to the business A/P  Debts of the business owed to suppliers Presentation Title runs here l 00/00/00

The Balance Sheet Thirsty?? Let’s look at the Coca-Cola Company’s Balance Sheet: http://www.marketwatch.com/investing/stock/ko/financials/balance-sheet Presentation Title runs here l 00/00/00

The Balance Sheet Pacioli Designs Create your first balance sheet. Take a look at the worksheet and create Pacioli Design’s balance sheet! Reference pages 26 & 27 for formatting guidelines! Presentation Title runs here l 00/00/00

Creditors’ vs. Owner’s Claims If a business is closed down, who takes possession of the assets? Creditors? Owner(s)? Both? Claims of creditors will be settled before any claims of the owner(s). One more exercise! Go to page 33 in your text book and complete exercise 2 (Carla’s Interior Design). Presentation Title runs here l 00/00/00

Accounting Standards Transparency Accountability Efficiency IFRS = International Financial Reporting Standards http://www.ifrs.org/use-around-the-world/why-global-accounting-standards/ (video) Recommended reading: https://www.pwc.com/ca/en/private-company/publications/aspe-or-ifrs-2011-03-en.pdf Transparency Accountability Efficiency Presentation Title runs here l 00/00/00

Accounting Standards Canadian GAAP = Canadian Generally Accepted Accounting Principles ASPE: Private enterprises can choose between using IFRS or ASPE guidelines. ASPE guidelines are closer to traditional Canadian Standards. Presentation Title runs here l 00/00/00

Accounting Standards Exercise Let’s take a closer look at the layout differences between ASPE and IFRS. Complete exercise 1 (A, B, C, D) on page 38 in your textbook. Feel free to work with a partner! Presentation Title runs here l 00/00/00