Section 5

Financial information 24 Balance sheets

and financial decisions

Worksheet 29: Balance sheets

Topic Key terms

Finance: balance sheets Fixed assets
Current assets
Current liabilities
Accounts payable (creditors)
Accounts receivable (debtors)
Overdraft
Inventories (stocks)

Aims
• To understand how to draw up a balance sheet
• To be able to interpret a balance sheet

Scenario
Val has produced a list of the information that she needs in order to have a good understanding
and control of the financial operations of Makeum & Useum. She now needs to prepare the
company’s balance sheet also for the end-of-year accounts.

Task 1
Using the following information, draw up an end-of-year balance sheet for Makeum & Useum Ltd.
(All figures in $)
Land and buildings 500 000
Machinery 100 000
Inventories at the end of the year 20 000
Accounts receivable (debtors) 30 150
Accounts payable (creditors) 41 500
Shareholder’s funds 530 000
Retained profit reserve 122 150
Long-term loans 9 000
Cash 52 500

Task 2
a) When would Makeum & Useum Ltd need to draw up a balance sheet and why?
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b) What does the balance sheet tell you about the business?
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Cambridge IGCSE Business Studies Teacher’s CD © Hodder & Stoughton Limited 2013 1/2
 Section 5
Financial information 24 Balance sheets
and financial decisions
c) Who uses balance sheets and for what purpose?
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Task 3
Find some examples of balance sheets for plcs and discuss what they tell you about the
companies.

Cambridge IGCSE Business Studies Teacher’s CD © Hodder & Stoughton Limited 2013 2/2