FINANCIAL STATEMENTS BALANCE SHEET BALANCE SHEET A balance

FINANCIAL STATEMENTS BALANCE SHEET

BALANCE SHEET • A balance sheet shows the financial position of a company for a specific date, usually for the end of a month or for the end of a 12 -month period of operations for a business.

BALANCE SHEET • A balance sheet is made up of three sections. • Assets are anything owned by the business. Assets are usually listed in an order called liquidity. • An asset is either purchased using some form of debt. (i. e. bank loan, buying on credit or account) If purchased this way the debt is called a Liability. • Liabilities are listed by the amount of time given to you by your creditors to pay the debt. The shortest time periods are listed

BALANCE SHEET • Assets can also be purchased by the owner if he or she invests in the company by putting his or her own money into the company. • The owner can invest other assets like cars, computers, or equipment that is the personal property of the owner, but is placed in the business and becomes the asset of the company. This is called Equity

BALANCE SHEET • At all times, the total of Assets must equal the total of Liabilities and Equity combined. This is called the Accounting Equation and is a fundamental principle of accounting for business. Assets = Liabilities + Equity

BALANCE SHEET • Interactive Example • Complete Balance Sheet Assignment 1 & 2 and hand in to be marked