The Balance Sheet
Balance Sheet Financial Statement Shows the financial position of a person, business or other organization.
Personal Balance Sheet
Small Business Balance Sheet What is the difference between the personal balance sheet and the small business balance sheet?
Assets anything owned by an individual or business that has a dollar value Usually used to generate income Ex. Trucks, Equipment, Cash Accounts Receivable: are amounts owed to a business by customers
Liabilities debts owed to other people, businesses or lenders other than owner Ex. Utilities due (Electricity, water, etc) Long Term Debt (Notes, Mortgage, Loans) Creditors: Lenders of money Debtors: Borrowers of money
Owners Equity = Assets - Liabilities the owner’s financial claim on assets: It’s the difference between assets and liabilities Owners Equity = Assets - Liabilities
Balance Sheet Formatting 6 steps to creating a balance sheet: Step 1: Headings (Who?,What?When?) Step 2: Assets Step 3: Liabilities Step 4: Owners Equity Step 5: Totals and Underlines Step 6: Dollar Signs ALWAYS USE A PENCIL!
Step 5&6 Con’t Step 5: Underlines Step 6: Dollar Signs Use a single underline to show a calculation Use double underlines for final totals Step 6: Dollar Signs $ beside first amount in each column $ beneath each single ruled line NOTE: These are mainly formalities, in reality now financial statement creation is done automatically with computer software
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. Liquidity: How quickly an asset can be turned to cash
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
Balance Sheet Investigation Balance Sheets for the following companies have been displayed around the room. Briefly analyze these Balance Sheets and answer the questions included Put some deep thought into your answers before moving on
Homework Page 13 # 5b, 6-8