Balance sheet
Business Studies
What is a balance sheet?
• The balance sheet is a financial statement.
• It is a list of all the assets (what the business
owns) and all the liabilities (what the business
owes) of a business. It also lists the owner’s
equity (what the business is worth)
The balance sheet is a financial
“snap shot”
• It lists the assets and
liabilities of the
business on a
particular day.
The Balance Sheet
• Used by many,
many people all
over the world
• Must be consistent
in order to be
comparable
• Stakeholders will
compare with:
– Other businesses
– Other industries
– Other Years
The Balance Sheet Heading
•
•
•
•
Must always be consistent!
Centred - Printed
1) Name of the business
2) Title of the financial document:
Balance Sheet
• 3) The date that the Balance Sheet was
prepared
The Balance Sheet Heading
Mustang Market
Balance Sheet
December 31, 2011
Balance Sheet
• 2 Columned
Balance Sheet
– Debit Accounts
(Assets) are listed
on the left
– Credit Accounts
(Liabilities &
Owner’s Equity)are
listed on the right
Balance Sheet
ASSETS
• Things “owned” by the business
• Listed On the left side
• Assets are listed in the order of
liquidity
• Liquidity
– Describes the ease of
converting an asset into cash.
• List the following in order of
liquidity
– Car, Office Supplies, Equipment,
Land, Building, Cash, Accounts
Receivable, Inventory
LIABILITIES
• The amount of money
that a business owes
other people and other
businesses (creditors).
• Listed on the Right
• Listed in the order that the
payment is due called
maturity date
Owner’s Equity
• The total worth of
the business
• Listed on the right
• Assets - Liabilities
The Balance Sheet
• Every balance sheet should be in –
wait for it.............
The Balance Sheet
• BALANCE!!!!!
• The left side of the balance sheet should
equal the right side of the balance sheet
• To determine totals we find totals for
– Total Assets, Total Liabilities, Total Liabilities
& Owner’s Equity
The Balance Sheet
Who?
What?
When?
Listed in
order in
which they
are paid.
Liquidity
Single
underline
Owner’s
name,
capital.
Double
underline
Totals are on the
same line
A=L+OE.