1. Making Changes in the Balance Sheet UNIT 1C A Lot to Learn

2. ASSETS LIABILITIES What changes can be made that will still keep the scales balanced? ++ We can add the same value to both sides NET WORTH

3. ASSETS LIABILITIES -- when we take away the same value from both sides THE SCALES ARE IN BALANCE NET WORTH

4. + - ASSETS LIABILITIES when we increase one asset and decrease another by the same value THE SCALES ARE IN BALANCE NET WORTH

5. THE SCALES ARE IN BALANCE ASSETS LIABILITIES + - when we increase one liability and decrease another by the same value NET WORTH

6. When the scales are in balance the Balance Sheet will balance ie all assets - all liabilities will = net worth

7. Changes which don’t balance the scales ASSETS LIABILITIES + If we increase 2 assets the balance sheet won’t balance + NET WORTH

8. ASSETS + + LIABILITIES If we increase 2 liabilities the balance sheet won’t balance NET WORTH

9. ASSETS LIABILITIES + - If we increase an asset and decrease a liability the balance sheet won’t balance NET WORTH

10. ASSETS LIABILITIES + - If we increase a liability and decrease an asset the balance sheet won’t balance NET WORTH

11. Balance Sheet as as today’s date Fixed Assets: Current Assets: Less Current Liabilities: Working Capital Net Worth Financed by: Net Worth Alan Sample Bike CDs and Tapes Bank Cash Owed to Dad ££££££ 200 150 100 20 Owed to Bike Repair Shop 10 45 120 55 65 350 £415 Alan pays Dad back in cash (-10) Still balances - decreased an asset and decreased a liability by same 10 110 0 45

12. Balance Sheet as as today’s date Fixed Assets: Current Assets: Alan Sample Bike CDs and Tapes Working Capital Net Worth Financed by: Bank Cash ££££££ 150 100 Owed to Bike Repair Shop 65 350 £415 10 110 45 Less Current Liabilities: 45 200 Alan withdraws £20 cash from the bank (-20) 80 Still balances! - increased one asset and decreased another asset (+20) 30 Net Worth

13. Alan Sample Balance Sheet as as today’s date Fixed Assets: Bike CDs and Tapes150 350 200 Current Assets: Bank Cash 110 80 30 Working Capital Net Worth Financed by: Owed to Bike Repair Shop 65 £415 45 Less Current Liabilities: 45 Net Worth Alan borrows £30 cash from Mum (+30) 60 Owed to Mum 30 75 140 Still balances! – increased assets and increased liabilities by the same ££££££

14. Alan Sample Balance Sheet as as today’s date Fixed Assets: Bike CDs and Tapes150 350 200 Current Assets: Bank Cash ££££££ 80 Owed to Bike Repair Shop Less Current Liabilities: 45 60 Owed to Mum 30 75 140 Working Capital Net Worth Financed by: 65 £415 Net Worth Mum pays Bike Shop £20. Alan to pay mum back (+20)50 (-20) 25 Still balances! – increased a liability, decreased another by the same

15. QUIZ Do the following changes balance the balance sheet or not? Increasing 2 assets Increasing an asset and decreasing a liability YES NO Decreasing assets and decreasing liabilities Increasing one asset and decreasing another Increasing a liability and decreasing an asset Decreasing 2 liabilities Increasing one liability and decreasing another Increasing an asset and increasing a liability