balance sheet
TRANSCRIPT
GROUP MEMBERS:MUHAMMAD DANIAL (12-TE-78)MUDASSAR EHSAN (12-TE-12)FAHAD SHAFIQUE (12-TE-44)
Topic: The Balance Sheet
What is a balance sheet?
“snapshot”
1. The purpose of the balance sheet.2. Basic Principles of a Balance Sheet.3. Forms of Balance Sheet. 4. The format and structure of the balance
sheet.5. Key aspects on a balance sheet.6. Suggestion related to Balance Sheet.
Purpose of the Balance Sheet
Basic Principles of a Balance Sheet
Owns-Assets Owes-Liabilities Worth-Owner’s Equity
Assets & Liabilities
Types of Assets FIXED ASSETS
Like: Buildings, Machinery, Vehicles
• CURRENT ASSETSLike: materials, debtors, money in the bank,
petty cash
Type of LIABILITIES LONG TERM LIABILITIES
Like: Loans, mortgages
CURRENT LIABILITIESLike: creditors
NET WORTH ASSETS minus LIABILITIES (current & fixed) (Current & fixed)
Forms of BALANCE SHEET
Report Form ASSETS listed above LIABILITIES and
EQUITY.
Account FormThe ASSETS’s account is placed in the left
andLIABILITIES and EQUITY are placed in the
right.
The structure of a Balance SheetASSETSFixed assets (assets listed)Total fixed assets ACurrent assets (assets listed)Total current assets B
LIABILITIESCurrent liabilities CWorking Capital B – CTotal Net Assets A + B – CFinanced By: (all listed)Capital EmployedD
The structure of a Balance Sheet – AssetsFixed assets €Buildings 60,000Equipment 20,000Total fixed assets 80,000
Current assetsStock 20,000Debtors 10,000Cash at bank 10,000Total current assets 40,000(Total assets = €120,000 )
The structure of a Balance Sheet– LiabilitiesLIABILITIES
€Current liabilitiesCreditors -10,000
Working Capital 30,000(This is the current assets €40,000 - minus the current
liabilities)
Total Net Assets 110,000(This is the total assets €120,000 - minus the current
liabilities)
The structure of a Balance Sheet– Capital and ReservesFinanced By: €
Accumulated Fund 70,000Surplus of Income 40,000
Capital Employed 110,000(This is the total amount in Capital and Reserves. It must equal the same amount as the total assets minus current liabilities).
Putting it all togetherASSETSFixed assets (assets listed)Total fixed assets €80,000 ACurrent assets (assets listed)Total current assets €40,000 B
LIABILITIESCurrent liabilities –€10,000 CWorking Capital €30,000 B – CTotal Net Assets €110,000 A + B – CFinanced By: (all listed)Capital Employed€110,000 D
Business NameBalance SheetDec 10, 2014
Assets-(1st Section)
Business NameBalance SheetDec 10, 2014
AssetsCash On HandEquipmentSuppliesTotal Assets
Liabilities- (2nd Section)
Business NameBalance SheetDec 10, 2014
AssetsCashEquipmentSuppliesTotal Assets
LiabilitiesDell ComputersAccounts Pay./SuppliesTotal Liabilities
Ow
ner's Equity- (3
rd Section)Business NameBalance SheetDec 10, 2014
Assets
Cash
Equipment
Supplies
Total Assets
Liabilities
Dell Computers
Accounts Pay./TG Supplies
Total Liabilities
Owner’s Equity
Capital & Withdrawals
A = L + O.E.Assets Must Equal
Liabilities + Owner's Equity
Key aspects on a balance sheet Fixed assets – is there enough money secured in
items which could be sold to raise capital? Cash in bank – is there enough to cover a short-
term crisis? Net current assets/liabilities – if this figure is
negative, the business hasn’t enough money to pay all the creditors in a reasonable time.
Shareholders’ funds – are these increasing? Shareholders want their investment to grow.
Suggestion related to Balance Sheet
Focusing on Net Worth Acquiring Assets Selectively Implementing Restructuring Programs
- THANK YOU -
