Professor Eric Carstensen The Balance Sheet Professor Eric Carstensen MiraCosta College http://www.miracosta.edu/instruction/accounting/index.html

The Balance Sheet Also known as the Statement of Financial Position, this statement is as of a certain date, rather that for a period of time (as with the other three statements). Some refer to it as a ‘snapshot’ of the company. The basis of the Balance sheet is the Accounting Equation. There are two presentations of the balance sheet as well as two different forms.

The Accounting Equation Assets = Liabilities + Owners' Equity An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. A liability is a claim against the assets, or legal obligations of a person or organization, arising out of past or current transactions or actions. Owner's equity represents the owner's investment in the business minus the owner's draws or withdrawals from the business plus the net income since the business began. A few selected examples of each type of account * Cash * Accounts Payable (A/P) * Paid In Capital (Owner * Accounts Receivable (A/R) * Unearned Revenue Investment, Common Stock) * Supplies * Notes Payable * Retained Earnings * Prepaid Insurance * Bank Loans * Equipment

Unclassified Balance Sheet Assets Liabilities Cash $ 25,800 Accounts Payable $14,100 Accounts Receivable 10,300 Wages Payable 1,500 Supplies 1,200 Interest Payable Prepaid Insurance 5,400 Unearned Revenue 7,900 Computer Equip 51,600 Notes Payable 20,000 Total Liabilities 44,700 Owners' Equity Total Equity 49,600 Total Assets $ 94,300 Total Liabilities & Equity

Classified Balance Sheet Assets Liabilities Cash $ 25,800 Accounts Payable $14,100 Accounts Receivable 10,300 Wages Payable 1,500 Supplies 1,200 Interest Payable Prepaid Insurance 5,400 Unearned Revenue 7,900 Total Current Assets $ 42,700 Total Current Liabs $ 24,700 Notes Payable 20,000 Computer Equipment 64,000 Total Liabilities 44,700 Accum Dep - Equip (12,400) Owners' Equity Total Plant Assets 51,600 Common Stock 40,000 Retained Earnings 9,600 Total Equity 49,600 Total Assets $ 94,300 Total Liabilities & Equity

The Report Form Balance Sheet Assets Cash $ 38,500 Accounts Receivable 3,900 Supplies 700 Prepaid Insurance 4,400 Total Current Assets $ 47,500 Computer Equipment 14,200 Accum Deprec - Equipment (100) Total Plant Assets 14,100 Total Assets $ 61,600 Liabilities Accounts Payable $ 5,600 Wages Payable 2,000 Interest Payable 50 Unearned Revenue 5,700 Total Current Liabilities $ 13,350 Notes Payable 10,000 Total Liabilities 23,350 Owners' Equity Common Stock 35,000 Retained Earnings 3,250 Total Owners' Equity 38,250 Total Liabilities & Equity $ 61,600

The Account Form Balance Sheet Assets Liabilities Cash $ 38,500 Accounts Payable $ 5,600 Accounts Receivable 3,900 Wages Payable 2,000 Supplies 700 Interest Payable 50 Prepaid Insurance 4,400 Unearned Revenue 5,700 Total Current Assets $ 47,500 Total Current Liabilities $ 13,350 Notes Payable 10,000 Computer Equipment 14,200 Total Liabilities 23,350 Accum Deprec - Equip (100) Owners' Equity Total Plant Assets 14,100 Common Stock 35,000 Retained Earnings 3,250 Total Owners' Equity 38,250 Total Assets $ 61,600 Total Liabilities & Equity

The Balance Sheet - Concluded In this video presentation, we have seen several ways to present Balance Sheet information. I have prepared other videos on the Income Statement and Cash Flow Statement as well, should you wish to view those. You might also wish to view the Accounting Cycle presentations to what goes into how the statements are created.