ACCOUNTING
ACCOUNTING
THE BALANCE SHEET
1. Definition:
2. Example of a Balance Sheet
| Steve’s Pizza - WHO – Name of Business |
|Balance Sheet - WHAT – Name of Statement |
|December 31, 20 - WHEN – Date of Statement |
|ASSETS | |LIABILITIES | |
| | | | |
|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 ASSETS |$433 320.00 |TOTAL LIABILITES AND EQUITY |$433 320.00 |
Indicates calculations are completed Indicates added or subtracted to a figure
3. The Types of Accounts in a Balance Sheet
a) ______________________ Items owned by a business that have value.
b) ______________________ Amounts owed by a business to others (i.e. Debts)
c) ______________________ What is left after all debts have been accounted for. (the difference between assets and liabilities)
4. Preparing a Balance Sheet
A balance sheet is a formal financial statement. Therefore, it must be written using the proper format.
Pay special attention to the location and set up of each section.
_________________________
|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.
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
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