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Presentation transcript:

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Assets Current assets: cash, debtors, stock Fixed assets Liabilities Current liabilities - payable within one year Long-term liabilities - payable after one year Capital Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Assets - Liabilities = Capital Example: Robert’s summarised balance sheet Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Robert: Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Example: Salma Initial capital = £100 000 Cash of £100 000 paid into new business bank account on 1 February 20X4 Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

The first balance sheet Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Subsequent transactions - 1 On 8 February 20X4 payment of £6500 for counter and shelving Reduce cash by £6500 Increase fixed assets by £6500 Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Subsequent transactions - 2 On 9 February 20X4, there is a delivery of stock costing £72 000. No payment is required until 9 March 20X4 Increase stock by £72 000 Increase current liabilities by £72 000 Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Subsequent transactions - 3 A loan of £20 000 is made to the business by Salma’s mother Increase cash at bank by £20 000 Increase long-term liabilities by £20 000 Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Example: Dipak Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

Use with Business Accounting and Finance Business has a lot of stock Can Dipak sell it? Will it become out of date soon? Creditors are owed over £16 000 Overdraft figure is high at over £13 000 Will the bank lend more money on overdraft? Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning