# Finances Accounting plays an important role in any business. Why do you think it is important for a business to keep track of its expenses?

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Finances Accounting plays an important role in any business. Why do you think it is important for a business to keep track of its expenses?

Lesson Objective Create a balance sheet. Content Vocabulary balance sheet A statement that shows a companys total assets, total liabilities, and owners equity on a given date. vertical analysis current ratio horizontal analysis vertical analysis Used to find what percent any item in a financial statement is of the totals in the statement. current ratio The ratio of the total assets to total liabilities. horizontal analysis Comparing two or more income statements for different periods by calculating the dollar amount and the percent change from one time period to another.

The Agees used \$60,000 of their own money plus a \$25,000 loan to start their clothing store. They received two shipments of merchandise. They paid cash for the \$15,000 shipment. They did not pay immediately for the \$8,000 shipment. They bought supplies for \$10,000. They have \$60,000 left in cash. What does their balance sheet show? Example 1

Step: Figure out the balance sheet. Example 1 Answer

Find the total assets, total liabilities, and owners equity. Cash: \$90,035 Merchandise: \$359,352 Bank loan: \$109,000 Taxes owed: \$45,982 Practice 1

Total assets: \$449,387 Total liabilities: \$154,982 Owners equity: \$294,405 Practice 1 Answer

Find the total assets, total liabilities, and owners equity. Cash: \$178,398 Merchandise: \$987,200 Building: \$675,230 Bank loan: \$275,675 Taxes owed: \$25,000 Practice 2

Total assets: \$1,840,828 Total liabilities: \$300,675 Owners equity: \$1,540,153 Practice 2 Answer

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