BALANCE SHEET

(Chapter 3)

LEARNING OBJECTIVES
Introduce

the basic concepts of

accounting : asset, liability &
owners equity

outline

the structure of the balance

sheet of a limited company

LEARNING OBJECTIVES
outline

the alternative balance

sheet formats

prepare

a balance sheet

accounting

equation

BALANCE SHEET
A financial statement that
reports the assets, liabilities,
and owners equity at a
specific date

ASSETS
ASSETS are resources owned by
business
fixed

assets
tangible fixed assets
intangible assets
financial assets
current assets

ASSETS
stocks

debtors (or accounts receivable)

cash
prepayments

LIABILITY
Existing debts & obligations such as
current,

or short-term, liabilities

short-term
trade

financial debt

creditors (or accounts payable)

accruals

LIABILITY
long-term

liabilities

long-term financial debt

long-term trade creditors (or

accounts payable)

provisions

OWNERS EQUITY
capital
share

premiums

retained

earnings

The
The Main
Main Elements
Elements Of
Of
The
The Balance
Balance Sheet
Sheet

A
A Typical
Typical Horizontal
Horizontal
Balance
Balance Sheet
Sheet Format
Format

A
A Vertical
Vertical Format
Format
Balance
Balance Sheet
Sheet (1)
(1)

A
A Vertical
Vertical Format
Format
Balance
Balance Sheet
Sheet (2)
(2)
fixed assets (FA) + current assets (CA)
current liabilities (CL) long-term
liabilities (LTL)
=equity (E)
FA + (CA CL) LTL = E

BASIC ACCOUNTING
EQUATION

ASSETS = LIABILITIES +
OWNERS EQUITY