Skip to main content

The Balance Sheet

The Balance Sheet is a list of the balances remaining on the Trial Balance after the Trading & Profit & Loss account has been done. The balances are arranged according to whether they are asset balances or liability or capital balances and gives the business's financial position at any given point in time. The Balance sheet is normally described " as at ". It is a snapshot at one particular point in time.

The balance sheet can be prepared in two formats:

Vertically, emphasising Assets - Liabilities = Capital

or

Horizontally, emphasising Assets = Capital + Liabilities

For the purposes of this exercise we will be using the vertical format, as this is most widely used in all types of businesses and its form of presentation makes comparisons with other years easier.

To re-cap:

ASSETS - There are two types of assets:

Fixed assets are the more or less permanent assets of the business. They are not normally for resale, e.g. premises, motor vehicles, fixtures and fittings, equipment and furniture.

Current assets are the types of assets used for trading purposes. These assets are usually more liquid than the fixes assets. In other words they are more readily converted into cash. They include cash, bank, debtors and stock.

LIABILITIES - There are two main types of liabilities:

Long term liabilities and are the creditors payable after 12 months. They include mortgages, loans, hire purchase repayments longer than 12 months and debentures.

Current liabilities represent the debts of the business which have to be paid in less than 12 months. These include trade creditors, bank overdrafts, and short-termloans that are repayable within 12 months.

CAPITAL

Capital represents what is known as " the net worth" of the owner(s). It is the difference between the assets and the liabilities. In the Balance Sheet it is listed under the "Financed By:" section. It includes capital introduced into the business, (which could be personally from the owners if a sole trader or partnership, or from the shareholders if a limited company), the net profit for the accounting period, less any owners drwings.

Now lets look at completing Pepe's Balance sheet

Sourch:
http://www.bized.co.uk
Labels:

Comments

Post a Comment

Silahkan tulis komentar anda, gunakan bahasa yang baik dan enak dibaca. Terimakasih...!

Popular posts from this blog

Interactive Worksheet: The Accounting Equation

by Ken Delaney-Moore, Sheffield Hallam University Aims: This worksheet deals with: The accounting equation. The accounting concepts of 'business entity' and 'dual aspect'. The effects of transactions on the balance sheet. After having completed the worksheet you should be better able to perform to syllabus specifications relating to these points. When you are done, please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you. A business start-up Imagine that 'Jim Sayers' puts £5,000 of his personal savings into a business bank accoun...
Post a Comment
Read more

MEMBUAT DATABASE APLIKASI AKUNTANSI DENGAN MICROSOFT ACCESS 2007

Microsoft Office Access 2007 merupakan aplikasi pembuatan database yang diciptakan Raksasa Microsoft Corporation, Hingga saat ini banyak sekali perusahaan menggunakan aplikasi ini dalam membuat database untuk keperluan bisnisnya, baik dengan menggunakan 100% access, maupun dengan memanfaatkan enginenya dan menggabungkan dengan aplikasi visual lainnya seperti Visual Basic, dsb. Access 2007 merupakan dipenyempurnaan dari access 2003. Berikut ini kita akan mencoba membuat database sederhana untuk keperluan akuntansi. Untuk membuat aplikasi database akuntansi tentu diperlukan banyak tabel, query, dan report yang harus dipersiapkan. Apalagi jika akuntansi untuk perusahaan dagang, dan manufaktur. Untuk lebih memudahkan bagi pemula yang ingin belajar membuat aplikasi dengan menggunakan Microsoft office access 2007, maka disini saya akan mencoba membahas aplikasi database akuntansi sederhana untuk perusahaan jasa. dalam menyusun suatu database tentu sebelumnya kita harus menyusun normalisas...
46 comments
Read more

The Current Ratio

The Current Ratio The current ratio is also known as the working capital ratio and is normally presented as a real ratio. That is, the working capital ratio looks like this: Current Assets: Current Liabilities = x: y eg 1.75: 1 The Carphone Warehouse is our business of choice, so here is the information to help us work out its current ratio. Consolidated Balance Sheet 31 March 2001 25 March 2000 £'000 £'000 Total Current Assets 315,528 171,160 Creditors: Amounts falling due within one year 222,348 173,820 As we saw in the brief review of accounts section with Tesco's financial statements, the phrase current liabilities is the same as Creditors: Amounts falling due within one year . Here's the table to fill in. OK, so we've done this one for you! Current Ratio For the Carphone Warehouse 31 March 2001 Current Assets: Current Liabilities 315,528: 222,348 1.42: 1 25 March 2000 Current Assets: Current Liabilities 171,160: 173,820 0.98: 1 Math...
Post a Comment
Read more