1
How often is a balance sheet drawn up?
A balance sheet is drawn up at the end of the accounting period / when neccessary
Give 2 examples of long term liabilities.
Loans, Mortgages.
Define assets.
Assets are economic resources owned by a business that are used in its daily operations to generate profit and benefit the business.
Define Fixed Assets.
Fixed Assets are assets that are to be used by the business for a long period of time.
Who draws up a balance sheet?
An Accountant
What are liabilities?
Money or things that the business owes for.
What does the double line on the balance sheet indciate?
Terminating mathematical equations.
Explain the purpose of the balance sheet.
The balance sheet is a financial statement that shows the financial position of a company at a specific point in time. It provides a snapshot of the company’s assets (what the business owns), liabilities (what the business owes), and capital/equity.
Which one of these would be considered as an asset on a balance sheet?
a) Unpaid debts owed by the company
b) The amount of money in a company's bank account
c) Money someone has invested
b) The amount of money in a company's bank account
Describe Retained Earnings.
Retained earnings are what is left over after everything has been paid (Money a company keeps).
A business takes out a $10,000 bank loan to purchase machinery. How will this be shown on the balance sheet?
What is the Accounting Equation?
Accounting equation is referred to as the relationship between assets, liabilities and capital of a business.
How many sections are there in a balance sheet?
5
What are the main components needed in the title of a balance sheet?
Name of Company
What document it is
What reporting period it is for
What are the major components of a balance sheet?
Assets, Liabilities, and OE
What does a single line on a balance sheet indicate?
That a mathematical operation is about to be done/and or the total of the above falls below the line.
Compare current and noncurrent (fixed) assets and give one example of each.
Current assets are assets than can be converted to cash easily or will be consumed within a year, and non current (fixed) assets are assets that are to be used by the business for a long period of time.
Current- Accounts receivables
Non-Current- Land
Explain the difference between accounts receivable and accounts payable.
Accounts receivable are amounts owed to the business by customers (debtors), while accounts payable are amounts the business owes to suppliers (creditors).
How does the accounting equation help a business to determine their financial position?
A balance sheet helps a company to determine their financial position by showing what and how much the company owns, how much it owes, and its equity.
How does the balance sheet help a company to determine their financial position?
A balance sheet helps a company to determine their financial position by showing what and how much the company owns, how much it owes, and its equity.
Identify the assets and liabilities
Machinery: $30,000
Cash in Hand: $5,000
Office Supplies: $2,000
Loan: $10,000
Accounts Payable; $3,500
Loan from Angel Can: $700
Assets= Machinery, Cash in Hand, Office Supplies
Liabilities= Loan from Bank, Accounts Payable, Loan from Angel Can
If a business' assets are $200,000 and its liabilities are $130,000. What is its equity?
(Assets- Liabilities= Capital)
$200,000- $130,000= $70,000
Using the Accounting Equation, solve the following problems:
Capital (25,000) Assets (?) Liabilities (10,000)
Capital (50,000) Assets (75,000) Liabilities (?)
Capital (?) Assets (120,000) Liabilities (70,000)
$35,000
$25,000
$50,000
List the three items on the top of a balance sheet. Be specific. One word per line.
Who
What
When
Using the Accounting Equations, solve the following problems:
Capital (18,000) Assets (?) Liabilities (2,000)
Capital (5,000) Assets (30,000) Liabilities (?)
Capital (?) Assets (90,000) Liabilities (45,000)
20,000
$25,000
$45,000