The document defines assets and liabilities according to a business's balance sheet. Assets are resources owned by the business, such as cash, equipment, inventory, and property. Liabilities are amounts owed, including loans, overdrafts, and unpaid expenses. The accounting equation shows that assets equal liabilities plus equity/capital invested in the business. Examples are given of common assets and liabilities to consider when starting a barber shop or beauty salon business.

1. Assets and Liabilities
Section 2 Objective 8
Give examples of
different types of
assets and
liabilities

2. Assets and Liabilities
• Balance sheet
– This financial statement gives a view of a business
financial position at the end of its financial period
– The view highlights the accounting equation (balance
sheet equation) relationship
• Assets = Capital (Equity)+ Liabilities
– Details given in the balance sheet are
• Assets
• Liabilities
• Capital (Equity)

3. Assets and Liabilities
• Assets are resources owned by the business
– Examples of assets include
• Cash in hand (notes and coins)
• Cash in bank
• Equipment
• Fixtures and fittings
• Inventory (known as stock)
• Land
• Premises
• Accounts receivables (known as debtors or trade
receivables)
• Vehicles

4. Assets and Liabilities
• Suppose you are
considering
opening a barber
shop or beauty
salon….
– What assets
would you need
to start your
business???

5. Assets and Liabilities
• Liabilities are the amounts owed by
the business to other individuals or
firms
– Examples of liabilities include
• Bank loans
• Bank overdraft
• Accounts payable (known as
creditors and trade payables)
• Mortgage loans
• Expenses owing (amounts unpaid
for goods or services)

6. Assets and Liabilities
• Suppose you are considering
opening a barber shop or
beauty salon….
– What liabilities would you
need to start your
business???

7. Assets and Liabilities
• Capital (known as Equity) represents the investment
made by the owner, partners or other individuals in
his or her business
• It is considered as the net value (worth) of the
business

8. Assets and Liabilities
• Remember:

9. Assets and Liabilities
• Analyse the pictures on the next few slides and
indicate whether each of them are
–Assets
• or
–Liabilities

10. Assets and Liabilities

11. Assets and Liabilities

12. Assets and Liabilities

13. Assets and Liabilities