1. The Balance Sheet

2. Balance Sheet Financial Statement
Shows the financial position of a person, business or other organization.

3. Personal Balance Sheet

4. Small Business Balance Sheet
What is the difference between the personal balance sheet and the small business balance sheet?

5. Assets
anything owned by an individual or business that has a dollar value
Usually used to generate income
Ex.
Trucks, Equipment, Cash
Accounts Receivable:
are amounts owed to a business by customers

6. Liabilities
debts owed to other people, businesses or lenders other than owner
Ex.
Utilities due (Electricity, water, etc)
Long Term Debt (Notes, Mortgage, Loans)
Creditors: Lenders of money
Debtors: Borrowers of money

7. Owners Equity = Assets - Liabilities
the owner’s financial claim on assets: It’s the difference between assets and liabilities
Owners Equity = Assets - Liabilities

8. Balance Sheet Formatting
6 steps to creating a balance sheet:
Step 1: Headings (Who?,What?When?)
Step 2: Assets
Step 3: Liabilities
Step 4: Owners Equity
Step 5: Totals and Underlines
Step 6: Dollar Signs
ALWAYS USE A PENCIL!

9. Step 5&6 Con’t Step 5: Underlines Step 6: Dollar Signs
Use a single underline to show a calculation
Use double underlines for final totals
Step 6: Dollar Signs
$ beside first amount in each column
$ beneath each single ruled line
NOTE: These are mainly formalities, in reality now financial statement creation is done automatically with computer software

10. The Balance Sheet 1. Write the heading: Who
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

11. The Balance Sheet 1. Write the heading: Who, What
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

12. The Balance Sheet 1. Write the heading: Who, What, When.
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

13. The Balance Sheet 2. Under the Assets subheading, list all assets in order of liquidity.
Liquidity: How quickly an asset can be turned to cash

14. The Balance Sheet 3. Under the Liabilities subheading, list all liabilities in the order they are due.
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

15. The Balance Sheet 4. Subheadings with more than one item must be totalled. Total the liabilities with a ruled line above the total.
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

16. The Balance Sheet 5. Under the Owner’s Equity subheading, record the Capital amount.
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

17. The Balance Sheet 6. Calculate total assets and total liabilities and owner’s equity. They should match. Include a ruled line above the totals.
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

18. The Balance Sheet 7. Put two ruled lines below the two totals.
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

19. The Balance Sheet 8. Add dollar signs to the first number in each column, the total assets, and the total liabilities and equity.
Chapter 2 – The Balance Sheet l Accounting 1, 7th Edition

20. Balance Sheet Investigation
Balance Sheets for the following companies have been displayed around the room.
Briefly analyze these Balance Sheets and answer the questions included
Put some deep thought into your answers before moving on

21. Homework
Page 13 # 5b, 6-8