1. Chapter 5 The Balance Sheet – Equity Section
Equity Relationships
Chapter 5
The Balance Sheet – Equity Section

2. The Big T… Rules for Debits and Credits
DEBIT SIDE
CREDIT SIDE
Assets +
Liabilities +
Owner's Equity + +
Revenues
Expenses +
Owner, Drawings +
Owner, Capital +

3. Balance Sheet
Formal statement showing the financial position of a business at a certain date
who
what
when
Short tem assets listed in terms of liquidity
Single lines imply addition or subtraction
Long term assets listed by length of life
Dollar signs on top of all columns and below any line
Double underline all major totals

4. Owner’s Equity
Expanded on balance sheet to show more information

5. Trial Balance (taken from ledger)
Statement Creation
Trial Balance (taken from ledger)
Income Statement
Balance Sheet

6. Trial Balance Dr Cr Sammer Services Trial Balance December 31, 2006
8,952.00 $
7,500.00
2,900.00
4,800.00
16,850.00
13,200.00
17,250.00
31,642.00
28,720.00
84,578.00
360.00
6,500.00
1,350.00
680.00
11,000.00
2,415.00
29,663.00
134,890.00
Telephone Expense
Wages Expense
Sammer Services
Trial Balance
December 31, 2006
Car Expense
Interest Expense
Miscellaneous Expense
Rent Expense
A. Sammer, Capital
A. Sammer, Drawings
Revenue
Bank Charges
Furniture and Equipment
Automobile
Accounts Payable
Bank Loan
Cash
Accounts Receivable
Supplies
Prepaid Insurance