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Making Changes in the Balance Sheet UNIT 1C A Lot to Learn.

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Presentation on theme: "Making Changes in the Balance Sheet UNIT 1C A Lot to Learn."— Presentation transcript:

1 Making Changes in the Balance Sheet UNIT 1C A Lot to Learn

2 ASSETS LIABILITIES What changes can be made that will still keep the scales balanced? ++ We can add the same value to both sides NET WORTH

3 ASSETS LIABILITIES -- when we take away the same value from both sides THE SCALES ARE IN BALANCE NET WORTH

4 + - ASSETS LIABILITIES when we increase one asset and decrease another by the same value THE SCALES ARE IN BALANCE NET WORTH

5 THE SCALES ARE IN BALANCE ASSETS LIABILITIES + - when we increase one liability and decrease another by the same value NET WORTH

6 When the scales are in balance the Balance Sheet will balance ie all assets - all liabilities will = net worth

7 Changes which don’t balance the scales ASSETS LIABILITIES + If we increase 2 assets the balance sheet won’t balance + NET WORTH

8 ASSETS + + LIABILITIES If we increase 2 liabilities the balance sheet won’t balance NET WORTH

9 ASSETS LIABILITIES + - If we increase an asset and decrease a liability the balance sheet won’t balance NET WORTH

10 ASSETS LIABILITIES + - If we increase a liability and decrease an asset the balance sheet won’t balance NET WORTH

11 Balance Sheet as as today’s date Fixed Assets: Current Assets: Less Current Liabilities: Working Capital Net Worth Financed by: Net Worth Alan Sample Bike CDs and Tapes Bank Cash Owed to Dad ££££££ Owed to Bike Repair Shop £415 Alan pays Dad back in cash (-10) Still balances - decreased an asset and decreased a liability by same

12 Balance Sheet as as today’s date Fixed Assets: Current Assets: Alan Sample Bike CDs and Tapes Working Capital Net Worth Financed by: Bank Cash ££££££ Owed to Bike Repair Shop £ Less Current Liabilities: Alan withdraws £20 cash from the bank (-20) 80 Still balances! - increased one asset and decreased another asset (+20) 30 Net Worth

13 Alan Sample Balance Sheet as as today’s date Fixed Assets: Bike CDs and Tapes Current Assets: Bank Cash Working Capital Net Worth Financed by: Owed to Bike Repair Shop 65 £ Less Current Liabilities: 45 Net Worth Alan borrows £30 cash from Mum (+30) 60 Owed to Mum Still balances! – increased assets and increased liabilities by the same ££££££

14 Alan Sample Balance Sheet as as today’s date Fixed Assets: Bike CDs and Tapes Current Assets: Bank Cash ££££££ 80 Owed to Bike Repair Shop Less Current Liabilities: Owed to Mum Working Capital Net Worth Financed by: 65 £415 Net Worth Mum pays Bike Shop £20. Alan to pay mum back (+20)50 (-20) 25 Still balances! – increased a liability, decreased another by the same

15 QUIZ Do the following changes balance the balance sheet or not? Increasing 2 assets Increasing an asset and decreasing a liability YES NO Decreasing assets and decreasing liabilities Increasing one asset and decreasing another Increasing a liability and decreasing an asset Decreasing 2 liabilities Increasing one liability and decreasing another Increasing an asset and increasing a liability


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