This will help you in grasping the concept about Balance Sheet. It is very helpful especially for economists and engineers as well. In case of any confusion you can contact me on linkedin. Thanx!

2. Topic:
The Balance Sheet

3. What is a balance sheet?
“snapshot”

4. 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.

7. Basic Principles of a Balance
Sheet
 Owns-Assets
 Owes-Liabilities
 Worth-Owner’s Equity

8. Assets & Liabilities

9. Types of Assets
 FIXED ASSETS
Like: Buildings, Machinery, Vehicles

10. • CURRENT ASSETS
Like: materials, debtors, money in the bank,
petty cash

11. Type of LIABILITIES
 LONG TERM LIABILITIES
Like: Loans, mortgages

12. CURRENT LIABILITIES
Like: creditors

13. NET WORTH
 ASSETS minus LIABILITIES
(current & fixed) (Current & fixed)

15. Forms of
 Report Form
ASSETS listed above LIABILITIES
and EQUITY.
 Account Form
The ASSETS’s account is placed in the left
and
LIABILITIES and EQUITY are placed in
the right.

16. The structure of a Balance
Sheet
ASSETS
Fixed assets (assets listed)
Total fixed assets
A
Current assets (assets listed)
Total current assets B
LIABILITIES
Current liabilities C
Working Capital B – C
Total Net Assets A + B – C
Financed By: (all listed)
Capital Employed D

17. The structure of a Balance
Sheet – Assets
Fixed assets €
Buildings 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 )

18. The structure of a Balance
Sheet– Liabilities
LIABILITIES
€
Current liabilities
Creditors -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)

19. The structure of a Balance
Sheet– Capital and Reserves
Financed By: €
Accumulated Fund 70,000
Surplus 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).

20. Putting it all together
ASSETS
Fixed assets (assets listed)
Total fixed assets
€80,000 A
Current assets (assets listed)
Total current assets €40,000 B
LIABILITIES
Current liabilities –€10,000 C
Working Capital €30,000 B – C
Total Net Assets €110,000 A + B – C
Financed By: (all listed)
Capital Employed €110,000 D

21. Business Name
Balance Sheet
Dec 10, 2014

22. Assets-(1stSection)
Business Name
Balance Sheet
Dec 10, 2014
Assets
Cash On Hand
Equipment
Supplies
Total Assets

23. Business Name
Balance Sheet
Dec 10, 2014
Assets
Cash
Equipment
Supplies
Total Assets
Liabilities
Dell Computers
Accounts Pay./Supplies
Total Liabilities

24. Business Name
Balance Sheet
Dec 10, 2014
Assets
Cash
Equipment
Supplies
Total Assets
Liabilities
Dell Computers
Accounts Pay./TG Supplies
Total Liabilities
Owner’s Equity
Capital & Withdrawals

25. Assets Must Equal
Liabilities + Owner's Equity

26. 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.

27. Suggestion related to Balance
Sheet
 Focusing on Net Worth
 Acquiring Assets Selectively
 Implementing Restructuring Programs