A balance sheet shows the value of (or
net worth) of a company on a given
day. It is a snapshot of a company’s
financial affairs at a single point in time.
 It is usually done at the end of a month
and companies often compare the
balance sheet with those of previous
months to determine whether their assets
or liabilities are growing.


Things that the company owns and has a dollar value
› Examples: car, real estate, computer

Fixed Assets - Assets of a long-term nature, such as land
and buildings. The business has acquired these assets
ordinarily in order to use them in the production of other
goods and services.

Account Receivable – (A/R) money owed to the
business

Current Assets – Assets used up within one year. Ex.
Inventory, materials, cash. These will be turned into
cash within one year.

Debts the organizations owes to other
organizations
› Examples:

Accounts Payable – (A/P) Money the business
owes other companies

Current Liabilities - Owed and must be paid
within the year

Long-term liabilities - A debt or portion of a debt
that does not have to be paid within a year

The value of the business = the amount
of money the owner initially invested in
the business plus accumulated profits
and minus money taken out of the
business (drawings or dividends)
Assets – liabilities = Owner’s Equity
Or
A = L + OE
Revenue is the money or promise of
money received from sale of goods or
services
 Expenses are the costs incurred to run a
business (e.g., salaries, utilities,
advertsing, etc.)
 Revenues – Expenses = Net Income
 Revenues – Expenses = Net Loss

Summarizes the items of revenue and
expenses
 Determines the net income or net loss for
a stated period of time
 Accounting period may be a month,
quarter (three months), six months, year
or any regular period of time
 Fiscal period is a synonym for
accounting period

W. Puma Tutoring Company
Income Statement
Three months ended March 31, 2004
Revenue
who
what
when
$2100
Expenses:
Office Supplies
Software
Postage
Gas
General
Net Income
$240
850
50
375
20
Indent one column
1535
$565
Total here
Double underline
$ at top of any column & below any line