Chapter 2 The Balance Sheet! Quiz on Friday Sep 12

Preparing a Balance Sheet! There are 6 steps for preparing a Balance Sheet. Step 1: Write the headings Who: Which company? What: Balance sheet? Or Income statement? When: Date and Year

Preparing a Balance Sheet! Step 2: Write “Assets” at the top of the left side column. Underline “Assets”. Then write in the individual assets on the left side. (under “Assets”)

Preparing a Balance Sheet! Step 2: Usually the order of Assets follows “liquidity” of the asset. is listed first, AR next, Supplies (examples are factory supplies like lubricant and office supplies like printer and paper) next. Delievery Truck, equipment and buildings are at the bottom of the asset list.

Preparing a Balance Sheet! Step 3: Write “Liabilities” at the top of the right side column. Use same font and boldness as “assets”. Underline “Liabilities”. Then write in the individual liabilities on the the right side. (under “Liabilites”)

Preparing a Balance Sheet! Step 3: Usually the liabilities are listed in the order in which they will paid. Supplier’s names are listed in alphabetical order. Draw a line below the last liability amount to indicate that you are adding up the dollar amounts to come up with “Total Liabilities”

Preparing a Balance Sheet! Step 4: Beneath the liabilities, write in the subheading “Owner’s Equity” and format it so it looks like the subheadings for “Assets” and “Liabilities”. Then write in the owner’s name plus the word “Capital”. The dollar amount is always on the right side of the item.

Preparing a Balance Sheet! Step 5: Complete the balance sheet by writing in the final totals (add up the amounts to get total)on the first fully open line. The two final totals must be on the same line. The two totals must be the same amount.

Preparing a Balance Sheet! Step 5: Place a single ruled line above and a double ruled line below each of the two totals. “Total Assets” is on the left side and “Total Liabilities and Equity” on the right side. Step 6: You have to put $ sign in total amount and in first amount.

Basic Record Keeping Practice When to abbreviate: We can not use abbreviations of names on financial statements except when a business name includes an abbreviation.

Basic Record Keeping Practice Use of Columnar Paper: We do not use commas or decimal when using columnar paper. Dash (-) is used when the dollar amount does not have any cents. (P26) Usually only one number should be filled in one square unit except cents area and when the number represents thousand or higher number.

Basic Record Keeping Practice Use of Ruled Lines: If you have to total amounts in a column, a single line is drawn beneath the column and the total amount is placed beneath this single line as shown in Page 26. If a total happens to be a final total, then you should double line the final total.

Basic Record Keeping Practice Use of Ruled Lines: On most balance sheet, in order to place the two final totals on the same line, you will have to leave one or more blank lines between the final total number and the last number. (P27) Show on the board the correct method and incorrect method (P27) Your writing must be neat! Go over #1 of yesterday homework.

Classwork / Homework -Answer Review Questions (Page 28) #1, 7, 8, 10, -Answer Exercise Questions (Page 28) # 2, 3,