THE BALANCE SHEET
The Balance Sheet is:
• a financial statement showing the
financial position of a person,
business, or other organization on a
specific date; usually prepared at the
end of the accounting/fiscal period
Example:
Company Name
Financial Statement Name
Date
(own)
(owned)
Alpha
Order
Listed in
order of
liquidity
(from
cash to
things
that take
longer to
sell)
Alpha
Order
Important Features:
• A=L+OE:
• set up in the form of the accounting equation where
assets are listed on the left side and liabilities and
owner’s equity appear on the right side (account
form)
• ASSETS:
• things that you own that have a dollar value
Accounts Receivable:
--money owed by customers (debtors)
Accounts Payable:
--money owed by the business (creditors)
• LIABILITIES:
• debts owed
• OWNER’S EQUITY
• owner investment (capital) or net worth;
assets – liabilities
• WHO?
the name of the business
• WHAT? the name of the financial statement
• WHEN? the date on which the financial position
is determined
• LIQUIDITY:
• the order in which assets are converted into
cash (ie. cash us usually considered the most
liquid and is listed first)
• CLAIMS AGAINST ASSETS:
• the order in which assets are sold when a
business closes operations in order to pay
liabilities; bank is paid first, then accounts
payable, and the owner receives any remaining
money; however, the owner also has to accept
any losses that might result from selling off the
assets
• FULL DISCLOSURE:
• the financial details of any item are fully
disclosed on a balance sheet; record
assets at cost value
• TOTALS:
• the two final totals, one on each side of
the balance sheet, should equal and are
recorded on the same line and underlined
with a double line
Sample Balance Sheet
• Prepare a balance sheet for pacific trucking as at June 30,
using the following information
Accounts Payable – Dini Bros.
Accounts Receivable – W. Caruso
Equipment
Bank Loan
Cash
Supplies
Accounts Payable – Packham Supply
Trucks
Accounts Receivable – R. Van Loon
B. Rissien, Capital
$1,516
150
22,174
18,000
3,265
2,465
3,946
55,075
620
$$$$$$
Assets
Cash
Accounts Receivable
W. Caruso
R. Van Loon
Supplies
Equipment
Trucks
Total Assets
Pacific Trucking
Balance Sheet
20-Jun-13
Liabilities
$ 3,265.00 Bank Loan
Accounts Payable
150.00 Dini Bros.
620.00 Packham Supply
2,465.00 Total Liabilities
22,174.00
55,075.00 Owner's Equity
B. Rissien, Capital
$ 83,749.00 Total Liabilities & Owner's Equity
$ 18,000.00
1,516.00
3,946.00
$ 23,462.00
60,287.00
$ 83,749.00
Assets
Cash
Accounts Receivable
W. Caruso
R. Van Loon
Supplies
Equipment
Trucks
Total Assets
Pacific Trucking
Balance Sheet
20-Jun-13
Liabilities
$ 3,265.00 Bank Loan
Accounts Payable
150.00 Dini Bros.
620.00 Packham Supply
2,465.00 Total Liabilities
22,174.00
55,075.00 Owner's Equity
B. Rissien, Capital
$ 83,749.00 Total Liabilities & Owner's Equity
$ 18,000.00
1,516.00
3,946.00
$ 23,462.00
60,287.00
$ 83,749.00
Homework:
• Answer Exercise # 1, 2, 3 p. 28-29 (t), p. 9, 10 (w)
****pick 2 of 3****