13. Activity
Taminmin College has $70,000 worth of assets
and its liabilities amounts to $40,000.
What is the amount of the
Proprietorship/Owners’ Equity?
Assets - Liabilities =
Proprietorship/Owners’ Equity
14. Mr Jack's Pizza Shop
Balance Sheet as at 30 June 2011
Assets Liabilities
Cash $2,000 Creditors $300
Debtors $100 Bank loan $5,000
Ingredients $800 Mortgage $10,000
Refrigerator $2,000
Pizza oven $3,000 Proprietorship
Delivery car $8,000 Capital - Mr Jack $600
$15,900 $15,900
15. Assessment
Classify each item to Assets or Liabilities and
work out the Proprietorship:
(1) Machinery $3000,
(2) Debtors $5000,
(3) Inventory $2000,
(4) Westpac account $10,000,
(5) Bank loan $8000,
(6) Bank overdraft -ANZ $500 and
(7) Creditors $2000.
16. What is a bank
What is inventory?
overdraft?
The quantity of goods and
A bank overdraft is when someone
materials on hand.
is able to spend more than what is
actually in their bank account.
For example: Record of the
amount of ingredients (to make
For example: I have $0 in my
pizza) kept in the storeroom or
bank, but I still withdraw $20 from
the refrigerator.
the ATM.
My bank overdraft is $20.
17. Mr Jack's Pizza Shop
Balance Sheet as at 30 June 2011
Assets Liabilities
Bank - Westpac $10,000 Bank overdraft -Anz $500
Debtors $5,000 Creditors $2,000
Inventory $2,000 Bank loan $8,000
Machinery $3,000
Proprietorship
Capital - Mr Jack $9,500
$20,000 $20,000
Editor's Notes
Link why we need to keep records to this topic- for tax purpose and to get a bank loan. What is a balance sheet? It is a summary of the business’s financial position.The balance sheet is a statement of what a business owns (assets) and owes (liabilities) at a specific point in time. The difference between the assets and the liabilities is the net worth of the business (Proprietorship/ Owners’ Equity). The left side of the balance sheet = the right side of the balance sheet.
"Assets" are future economic benefits controlled by the entity as a result of past transactions or other past events.Whatever the business owns that has a value – asset.
Examples of assets: cash $2000, ingredients for making pizza $800, refrigerator $2,000, pizza oven $3,000 and a pizza delivery car $8,000.
Mr. Jack sells some pizzas to Tom (from ABC Pty Ltd). ABC Pty Ltd is a debtor because ABC Pty Ltd will pay Mr. Jack the cost of pizzas ($100) within 30 days’ time. Show the class a real sales invoice. These items (cash, ingredients for making pizza, refrigerator, pizza oven, pizza delivery car & the cost of the pizzas sold to ABC Pty Ltd) are what the pizza business owns, which are the Assets of the business.
"Liabilities" are the future sacrifices of economic benefits that the entity is presently obliged to make to other entities as a result of past transactions or other past events.Whatever the business owes which usually involves sacrificing some assets - liability
Mr. Jack purchases some ingredients from Mrs. Green to make pizza. Mrs. Green is a creditor because Mr. Jack will pay Mrs. Green the cost of these ingredients ($300) within 30 days’ time.Show the class a real purchase invoice.
Mr. Jack gets a loan from the bank to renovate the pizza shop ($5,000).
Mr. Jack pays the mortgage on the shop ($10,000). These items (creditors, loan from bank and mortgage) are Liabilities of Mr. Jack’s pizza business.
Proprietorship : residual interest in the assets of the entity after deduction of its liabilities.What the pizza business is worth.What the pizza business owes to Mr. Jack
