over view of balance sheet

1. Submitted to
Submitted By :-Ishtiaq Bhatti
Class :- BBA(Hones) Roll :-17
Subject :- Financial Accounting

2. DEFINITIONBalance Sheet
 A financial statement that summarizes a company's
assets, liabilities and shareholders' equity at a specific
point in time. These three balance sheet segments give
investors an idea as to what the company owns and
owes, as well as the amount invested by the
shareholders
 The balance sheet based on accounting equation:
Assets = Liabilities + Owner Equity

3.  It's called a balance sheet because the two sides
balance out. This makes sense: a company has to pay
for all the things it has (assets) by either borrowing
money (liabilities) or getting it from shareholders
(shareholders' equity).
Balance
Liabilities +
Owner EquityAssets

4. Assets
Assets – are what a business owns
Fixed assets – have a lifespan of
more than one year, e.g. machinery,
building etc.
Current Assets – are constantly
changing e.g. cash, account
receivable etc.

5. Liabilities
Liabilities – what is owed by the
business
Current Liabilities – e.g. trade creditors
(suppliers of goods on credit), bank
overdraft, short-term loans (less than 1
year)
Long-term liabilities – normally longer
than 1 year – e.g. mortgage, bank loan

6. Owner Equity
Capital – provided by the owner of
the business and treated as being
owned to the owner of the business
Profits – may increase capital
Drawings – may decrease capital
Reserves – monies retained by
business

7. Assets
Fixed assets $
 Premises 60,000
 Equipment 20,000
 Total fixed assets 80,000
 Current assets
 Stock 20,000
 Debtors 10,000
 Cash at bank 10,000
 Total current assets 40,000
 (Total assets = $120,000 but this figure doesn’t show)

8. LiabilitiesCurrent liabilities $
 Creditors 10,000
 Short-term loans 30,000
 Suppliers 20,000
 Total 60,000
 Long-term Liabilities
 Bank loans 20,000
 Total 20,000
 Total Liabilities = $80,000

9. Owner equity
 Owner Equity $
 Capital 30,000
 Profit 10,000
 Total 40,000
 Assets should be equal to liabilities + Owner Equity

10. Balance Sheet
 Assets
 Fixed assets $
 Premises 60,000
 Equipment 20,000
 Total fixed assets 80,000
 Current assets
 Stock 20,000
 Debtors 10,000
 Cash at bank 10,000
 Total current assets 40,000
 120,000
 Liabilities
Current liabilities
 Creditors 10,000
 Short-term loans 30,000
 Suppliers 20,000
 Total 60,000
 Long-term Liabilities
 Bank loans 20,000
 Total Liabilities 80,000
 Owner Equity
 Capital 30,000
 Profit 10,000
 Total 40,000
 Total Liabilities & Owner Equity 120,000