THE BALANCE SHEET The Balance Sheet is a

THE BALANCE SHEET

The Balance Sheet is: • a financial statement showing the financial position of a person, business, or other organization on a specific date; usually prepared at the end of the accounting/fiscal period

Example: Company Name Financial Statement Name Date (own) (owned) Alpha Order Listed in order of liquidity (from cash to things that take longer to sell) Alpha Order

Important Features: • A=L+OE: • set up in the form of the accounting equation where assets are listed on the left side and liabilities and owner’s equity appear on the right side (account form) • ASSETS: • things that you own that have a dollar value Accounts Receivable: --money owed by customers (debtors) Accounts Payable: --money owed by the business (creditors)

• LIABILITIES: • debts owed • OWNER’S EQUITY • owner investment (capital) or net worth; assets – liabilities • WHO? the name of the business • WHAT? the name of the financial statement • WHEN? the date on which the financial position is determined

• LIQUIDITY: • the order in which assets are converted into cash (ie. cash is usually considered the most liquid and is listed first) • CLAIMS AGAINST ASSETS: • the order in which assets are sold when a business closes operations in order to pay liabilities; bank is paid first, then accounts payable, and the owner receives any remaining money; however, the owner also has to accept any losses that might result from selling off the assets

• FULL DISCLOSURE: • the financial details of any item are fully disclosed on a balance sheet; record assets at cost value • TOTALS: • the two final totals, one on each side of the balance sheet, should equal and are recorded on the same line and underlined with a double line

Sample Balance Sheet • Prepare a balance sheet for pacific trucking as at June 30, using the following information Accounts Payable – Dini Bros. $1, 516 Accounts Receivable – W. Caruso 150 Equipment 22, 174 Bank Loan 18, 000 Cash 3, 265 Supplies 2, 465 Accounts Payable – Packham Supply 3, 946 Trucks 55, 075 Accounts Receivable – R. Van Loon 620 B. Rissien, Capital $$$$$$

Homework: • Answer Exercise # 1, 2, 3 p. 28 -29 (t), p. 9, 10 (w)