1. Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

2. 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 © 2005 Thomson Learning

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

4. Use with Business Accounting and Finance
Robert:
Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

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

6. The first balance sheet
Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

7. 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 © 2005 Thomson Learning

8. Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

9. Subsequent transactions - 2
On 9 February 20X4, there is a delivery of stock costing £ 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 © 2005 Thomson Learning

10. Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

11. Subsequent transactions - 3
A loan of £ 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 © 2005 Thomson Learning

12. Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

13. Use with Business Accounting and Finance
Example: Dipak
Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

14. Use with Business Accounting and Finance
Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

15. 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 © 2005 Thomson Learning