Balance Sheets What is a balance sheet It

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Balance Sheets

Balance Sheets

What is a balance sheet? It is a sheet produced at the end of

What is a balance sheet? It is a sheet produced at the end of a financial year stating a summary of a firms assets, liabilities and capital. • Assets being the resources owned by a business. • Liabilities being the debts of a business. • Capital being the money put into the business by the owner(s).

Here is an example of a balance sheet by a company named Kodak.

Here is an example of a balance sheet by a company named Kodak.

Structure The structure of Balance sheets may vary between different companies, however, they all

Structure The structure of Balance sheets may vary between different companies, however, they all provide of financial summary of a firm.

Equation In all balance sheets, the value of assets will equal the value of

Equation In all balance sheets, the value of assets will equal the value of liabilities and capital. This is because all resources purchased by a business have to be financed from either capital or liabilities. Therefore; Assets = Capital + Liabilities

Current assets are assets that will be changed into cash within one year. It

Current assets are assets that will be changed into cash within one year. It includes ; Stocks Debtors Cash

Current liabilities Current Liabilities are business debts which must be repaid within 12 months.

Current liabilities Current Liabilities are business debts which must be repaid within 12 months. They include; Trade creditors Leases and hire purchase Short term loans and overdrafts

Long term Liabilities Long term liabilities is any money owed more than one year.

Long term Liabilities Long term liabilities is any money owed more than one year. They may include; A mortgage A long-term loan Long-term leases and hire purchase

What for? Balance sheets are used to show the financial position of a business

What for? Balance sheets are used to show the financial position of a business at a point in time. Examples may include; It shows the value of all business assets, capital and liabilities. It shows the performance of a business and its potential It shows the asset and capital structure of a business

Questions 1. 2. 3. 4. 5. What is the equation? Name one example of

Questions 1. 2. 3. 4. 5. What is the equation? Name one example of a Current liability Name one example of a Long Term Liability Name one example of a Current assets How does a balance sheet benefit a business?