1. Balance Sheet A final statement which list all the Assets and the Liabilities of the business on a specified date. A final statement which list all the Assets and the Liabilities of the business on a specified date. An Asset is an item that will give present or future monetary benefits to a business e.g. An Asset is an item that will give present or future monetary benefits to a business e.g. an item or money that the business own an item or money that the business own A Liability is the amount of money or an item that the business owes to a third party. A Liability is the amount of money or an item that the business owes to a third party.

2. Balance Sheet Equation Assets = capital + liabilities Assets = capital + liabilities Capital = assets – liabilities Capital = assets – liabilities Types of Asset: Types of Asset: Fixed assets Fixed assets A fixed asset is acquired for the purpose of use in the business for a period of time (more than 12 months). A fixed asset is acquired for the purpose of use in the business for a period of time (more than 12 months). E.g. equipments, machinery E.g. equipments, machinery Current assets Current assets Anything owed by the business which is likely to be turned into cash within the next one year. Anything owed by the business which is likely to be turned into cash within the next one year. E.g. stocks, debtors cash E.g. stocks, debtors cash

3. TYPES OF LIABILITIES TYPES OF LIABILITIES Current Liability Current Liability Anything owed by the organisation which is likely to be paid within the next 1 year. Anything owed by the organisation which is likely to be paid within the next 1 year. E.g. creditors, overdraft, dividends, tax E.g. creditors, overdraft, dividends, tax Long term liability Long term liability A source of long term borrowing (creditor) falling due after more than one year A source of long term borrowing (creditor) falling due after more than one year E.g. bank loans, Mortgages, debentures E.g. bank loans, Mortgages, debentures Capital Capital Funds invested in the company, either from owners (shareholders) or from lenders (banks) Funds invested in the company, either from owners (shareholders) or from lenders (banks)

4. OTHER TERMS Drawings – any amount withdrawn by the owners during the year. Drawings – any amount withdrawn by the owners during the year. Depreciation – the reduction in value of a fixed asset during its life time. Depreciation – the reduction in value of a fixed asset during its life time.