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Balance sheet
Business Studies
What is a balance sheet?
• The balance sheet is a financial statement.

• It is a list of all the assets (what the business
  owns) and all the liabilities (what the business
  owes) of a business.
The balance sheet is a financial
“snap shot”
• It lists the assets and
  liabilities of the
  business on a
  particular day.
FIXED ASSETS
• These are assets that the
  business owns.
• They will keep these
  assets for several years
  so they are fixed.
• Examples: Buildings ,
  Machinery, Vehicles
CURRENT ASSETS
• Current assets mean
  that the assets will not
  stay in the business
  for long.
• Examples: materials,
  debtors, money in the
  bank, petty cash
CURRENT LIABILITIES
• The amount of money
  that a business owes
  other people and other
  businesses (creditors).
• Liabilities are “current”
  because the amount
  owed can vary from one
  day to the next.
• They must be paid back
  within a year.
NET CURRENT ASSETS
•   ASSETS        minus   LIABILITIES
(current & fixed)         (current)
LONG TERM LIABILITIES
• These are debts need
  paying back in the
  future (one year +)

• Examples: Loans,
  mortgages
NET ASSETS
• ASSETS          minus    LIABILITIES
(current & fixed)         (Current & fixed)
The second section of the balance
sheet

• This looks at where the money which was
  used to buy the long term and short term
  assets came from
The start up of the business is
funded by:
  CAPITAL & RESERVES
• SHARE CAPITAL – The amount of money paid by
  shareholders in return for a share in the business.
• PROFIT & LOSS ACCOUNT – Net profit from the
  previous financial year is transferred into the balance
  sheet.
• RETAINED PROFIT – businesses do not give all of their
  profits back to shareholder
Exercise




• NET ASSETS SHOULD EQUAL THE
  AMOUNT OF MONEY THAT HAS BEEN
  INVESTED IN THE BUSINESS.
• BOTH PARTS OF THE BALANCE SHEET
  MUST BALANCE

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Balance sheet

  • 2. What is a balance sheet? • The balance sheet is a financial statement. • It is a list of all the assets (what the business owns) and all the liabilities (what the business owes) of a business.
  • 3. The balance sheet is a financial “snap shot” • It lists the assets and liabilities of the business on a particular day.
  • 4. FIXED ASSETS • These are assets that the business owns. • They will keep these assets for several years so they are fixed. • Examples: Buildings , Machinery, Vehicles
  • 5. CURRENT ASSETS • Current assets mean that the assets will not stay in the business for long. • Examples: materials, debtors, money in the bank, petty cash
  • 6. CURRENT LIABILITIES • The amount of money that a business owes other people and other businesses (creditors). • Liabilities are “current” because the amount owed can vary from one day to the next. • They must be paid back within a year.
  • 7. NET CURRENT ASSETS • ASSETS minus LIABILITIES (current & fixed) (current)
  • 8. LONG TERM LIABILITIES • These are debts need paying back in the future (one year +) • Examples: Loans, mortgages
  • 9. NET ASSETS • ASSETS minus LIABILITIES (current & fixed) (Current & fixed)
  • 10. The second section of the balance sheet • This looks at where the money which was used to buy the long term and short term assets came from
  • 11. The start up of the business is funded by: CAPITAL & RESERVES • SHARE CAPITAL – The amount of money paid by shareholders in return for a share in the business. • PROFIT & LOSS ACCOUNT – Net profit from the previous financial year is transferred into the balance sheet. • RETAINED PROFIT – businesses do not give all of their profits back to shareholder
  • 12. Exercise • NET ASSETS SHOULD EQUAL THE AMOUNT OF MONEY THAT HAS BEEN INVESTED IN THE BUSINESS. • BOTH PARTS OF THE BALANCE SHEET MUST BALANCE