1. The Balance Sheet Made easy How to set out a Balance Sheet. Use with the ‘best selling guide’.

2. Balance Sheets are ALWAYS set out in the same way. You must learn this, and then it is easy to answer questions on them.

3. We always start with Fixed Assets. Theses are things you own and will kep fo more than a year. Fixed Assets Buildings1,000,000 Machines 500,000 Vehicles 150,000 Fixtures & Fittings 50,000 1,700,000

4. In limited Companies you will usually see them as a total rather than itemeised WHY? Fixed Assets1,700,000

5. Less Depreciation200,000 Net book Value1,500,000 We then need to subtract the depreciation. This means the Bal Sheet reflects the true value of the assets.

6. We then add in any intangible assets. E.G. Trademarks, brands or goodwill Fixed Assets1,700,000 Less Depreciation200,000 Net book Value1,500,000 + Intangible assets500,000 2,000,000

7. Then you add in current assets. Things you own but will use up within the year. Fixed Assets1,700,000 Less Depreciation200,000 Net book Value1,500,000 + Intangible assets500,000 2,000,000 Current Assets Stock 100,000 Debtors400,000 Cash200,000 700,000

8. Then you subtract the current liabilities. Things you owe but will pay within the year. Fixed Assets1,700,000 Less Depreciation2,000,000 Net book Value1,500,000 + Intangible assets500,000 2,000,000 Current Assets Stock 100,000 Debtors400,000 Cash200,000 700,000 Less: Current Liabilities Creditors(150,000) Overdraft(50,000)

9. Next we subtract current liabilities from the current assets. This gives us Working Capital Fixed Assets1,700,000 Less Depreciation200,000 Net book Value1,500,000 + Intangible assets500,000 2,000,000 Current Assets Stock 100,000 Debtors400,000 Cash200,000 700,000 Less: Current Liabilities Creditors(150,000) Overdraft(50,000) Working Capital500,000

10. Fixed Assets1,700,000 Less Depreciation200,000 Net book Value1,500,000 + Intangible assets500,000 2,000,000 Current Assets Stock 100,000 Debtors400,000 Cash200,000 700,000 Less: Current Liabilities Creditors(150,000) Overdraft(50,000) Working Capital500,000 Net Assets2,500,000 To finish the top half we add working capital to the fixed assets. This gives us Net Assets.

11. The 2 nd ½ shows how all of this was paid for. Loan, Owners capital and reserves Fixed Assets1,700,000 Less Depreciation200,000 Net book Value1,500,000 + Intangible assets500,000 2,000,000 Current Assets Stock 100,000 Debtors400,000 Cash200,000 700,000 Less: Current Liabilities Creditors(150,000) Overdraft(50,000) Working Capital500,000 Net Assets2,500,000 Shareholders funds Share Capital1,500,000 Reserves700,000 Bank loan300,000 Capital Employed2,500,000

12. Capital Employed is the same as Net Assets. They BALANCE! Fixed Assets1,700,000 Less Depreciation200,000 Net book Value1,500,000 + Intangible assets500,0002,000,000 Current Assets Stock 100,000 Debtors400,000 Cash200,000 700,000 Less: Current Liabilities Creditors(150,000) Overdraft(50,000) Working Capital500,000500,000 Net Assets2,500,000 2,500,000 Shareholders funds Share Capital1,500,000 Reserves700,000 Bank loan300,000 Capital Employed2,500,0002,500,000