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Balance Sheet: Business Studies

The balance sheet is a financial statement that lists a business's assets (what it owns), liabilities (what it owes), and equity (the owner's investment). It provides a snapshot of these accounts on a specific date. Assets are categorized as fixed assets, which will be kept for several years, and current assets, which will not stay long-term. Liabilities include current liabilities that must be paid within a year and long-term liabilities due after one year. The balance sheet balances by having total assets equal total liabilities plus equity.

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59 views

Balance Sheet: Business Studies

The balance sheet is a financial statement that lists a business's assets (what it owns), liabilities (what it owes), and equity (the owner's investment). It provides a snapshot of these accounts on a specific date. Assets are categorized as fixed assets, which will be kept for several years, and current assets, which will not stay long-term. Liabilities include current liabilities that must be paid within a year and long-term liabilities due after one year. The balance sheet balances by having total assets equal total liabilities plus equity.

Uploaded by

EngineerYM
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Balance sheet

Business Studies
What is a balance sheet?
• The balance sheet is a financial statement.

• It is a list of all the assets (what the business


owns) and all the liabilities (what the business
owes) of a business.
The balance sheet is a financial
“snap shot”
• It lists the assets and
liabilities of the
business on a
particular day.
FIXED ASSETS
• These are assets that the
business owns.
• They will keep these
assets for several years
so they are fixed.
• Examples: Buildings ,
Machinery, Vehicles
CURRENT ASSETS
• Current assets mean
that the assets will not
stay in the business
for long.
• Examples: materials,
debtors, money in the
bank, petty cash
CURRENT LIABILITIES
• The amount of money that
a business owes other
people and other
businesses (creditors).
• Liabilities are “current”
because the amount owed
can vary from one day to
the next.
• They must be paid back
within a year.
NET CURRENT ASSETS
• ASSETS minus LIABILITIES
(current & fixed) (current)
LONG TERM LIABILITIES
• These are debts need
paying back in the
future (one year +)

• Examples: Loans,
mortgages
NET ASSETS
• ASSETS minus LIABILITIES
(current & fixed) (Current & fixed)
The second section of the balance
sheet

• This looks at where the money which was


used to buy the long term and short term
assets came from
The start up of the business is
funded by:
CAPITAL & RESERVES
• SHARE CAPITAL – The amount of money paid by
shareholders in return for a share in the business.
• PROFIT & LOSS ACCOUNT – Net profit from the previous
financial year is transferred into the balance sheet.
• RETAINED PROFIT – businesses do not give all of their
profits back to shareholder
Exercise

• NET ASSETS SHOULD EQUAL THE


AMOUNT OF MONEY THAT HAS BEEN
INVESTED IN THE BUSINESS.
• BOTH PARTS OF THE BALANCE SHEET
MUST BALANCE

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