ACCOUNTING



ACCOUNTING

THE BALANCE SHEET

1. Definition:

A Business Report that shows the financial position at a specific point in time. (snapshot)

2. Example of a Balance Sheet

| Steve’s Pizza - WHO – Name of Business |

|heading Balance Sheet - WHAT – Name of Statement |

|December 31, 20 - WHEN – Date of Statement |

|ASSETS - own | |LIABILITIES - owe | |

| | | | |

|Cash |$26 158.00 |Accounts Payable | |

|Accounts Receivable | |Pizza Wholesale Ltd. |$18 925.00 |

|Joe’s Place |4 192.00 |Bank Loan |52 496.00 |

|Waldo’s Deli |3 720.00 |Mortgage on Building |96 000.00 |

|Supplies |14 250.00 |TOTAL LIABILITIES |$167 421.00 |

|Equipment |95 000.00 | | |

|Building |140 000.00 |OWNER’S EQUITY | |

|Land |150 000.00 | | |

| | |Steve Switzer, Equity |$265 899.00 |

| | | | |

| | |TOTAL LIABILITES AND EQUITY | |

|TOTAL ASSETS |$433 320.00 | |$433 320.00 |

Indicates calculations are completed Indicates added or subtracted to a figure

A – L - OE

A = L + OE

3. The Types of Accounts in a Balance Sheet

a) _Assets_ Items owned by a business that have value.

b) _Liabilities_ Amounts owed by a business to others (i.e. Debts)

c) _Owner’s Equity_ What is left after all debts have been accounted for. (the difference between assets and liabilities) A – L - OE

4. Preparing a Balance Sheet

A balance sheet is a formal financial statement. Therefore, it must be written using the proper format. (in blue or black ink)

Pay special attention to the location and set up of each section.

__Title (who, what, when)_

|Robert's Sports Facility |

|Balance Sheet |

|June 30, 20-- |

|  |  |  |  |

|ASSETS | LIABILITIES |

|Cash | $ 6,000.00 | Accounts Payable | $ 4,500.00 |

|Accounts Receivable | 3,500.00 | Bank Loan | 60,000.00 |

|Office Supplies | 550.00 | Mortgage Payable | 85,000.00 |

|Training Equipment | 95,000.00 | TOTAL LIABILITIES | $149,500.00 |

|Building | 100,000.00 |  |  |

|Land | 35,000.00 | OWNER'S EQUITY |

| | | B. Smith, Capital | $ 90,550.00 |

| | | |  |

|TOTAL ASSETS | $240,050.00 | TOTAL LIABILITIES AND | $240,050.00 |

| | |OWNER'S EQUITY | |

Assets are always listed on the LEFT side, in order of liquidity. (Ability to turn asset into cash)

Liabilities are always listed on the RIGHT side, in order of payment, from weekly to monthly.

Accounts Receivable – people/companies that owe you money

(i.e. They have purchased goods but not yet paid for them.)

Accounts Payable – people/companies that are owed money- you need to pay them

The balance sheet focuses on the fundamental accounting equation:

Assets = Liabilities + Owner’s Equity

The accounting equation can be manipulated to calculate owner’s equity and liabilities:

• Owner’s Equity = Assets – Liabilities

• Liabilities = Assets – Owner’s Equity

-----------------------

Owes the company

Company owes $

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