Chapter 8 Balance Sheet Learning Objectives 1 The
Chapter 8 Balance Sheet Learning Objectives 1. The Balance Sheet 2. Balance Sheet layout 3. Completion of Capital Account 4. Format of Balance Sheet P 2 C 1 - 1
1. The Balance Sheet • It is a statement showing the assets, capital and liabilities of a business at a particular date. • Not part of the double entry system • To list the closing balance on assets, capital and liabilities C 1 - 2
2. Balance Sheet Layout • Assets – Non Current Asset – Current Assets C 1 - 3
Non Current Asset (NCA) • Are of long life • Are to be used in the business, and • Were not bought only for the purpose of resale • NCA are listed starting with those the business will keep the longest, down to those which will not be kept so long. C 1 - 4
Current Assets • Cash in hand, cash at bank, debtors, items held for resale at a profit (i. e. stock) or items that have a short life • These are listed starting with the asset furthest away from being turned into cash, finishing with cash itself C 1 - 5
Long-term Liabilities • Repayable beyond the next accounting year • E. g. Loan, Debentures C 1 - 6
Current Liabilities • Repayable within the next 12 months • E. g. – Creditors – Bank overdraft C 1 - 7
3. Completion of capital account Old Capital + Net Profit – Drawings = New Capital C 1 - 8
4. Format of Balance Sheet • Horizontal Style • Vertical Style C 1 - 9
Horizontal Style C 1 - 10
Vertical Style C 1 - 11
End of Chapter 8 C 1 - 12
- Slides: 12
