Balance Sheets Assets = Liabilities + Owner’s Equity.

Balance Sheets

Assets = Liabilities + Owner’s Equity

Balance Sheet

• The Balance Sheet reports the figures of the Accounting Equation

• Assets = Liabilities + Owner’s Equity

Own Owe Owe to others the owner

Balance Sheet

AssetsBankEquipmentDebtors (owe business money)

Stock (for sale)

LiabilitiesOverdraftLoan

Owner’s EquityCapital (What the owner put into the

business)

Net ProfitDrawings (What the owner takes

out of the business

Balance Sheet

• The Total Assets must equal the Total Equities (Liabilities + Owner’s Equity)

Classifying Revision

• Put a whole stack of items and we do the classifications again.

GST Payable

• Businesses collect GST from customers and pay GST to suppliers.

• If GST Collected from customers is greater than GST Paid to suppliers then the business owes money to the Australian Tax Office.

• This is called GST Payable and is a Liability.

How GST Payable is calculated

Statement of Receipts and PaymentsBank at beginning 2,000ReceiptsFees 6,000GST Collected 600 6,600Less Payments 8,600Wages 1,000Rent 1,500GST Paid 150 3,000Bank at end 5,600

GST collected 600 less GST Paid 150 = GST Payable 450

GST Refund

• Businesses collect GST from customers and pay GST to suppliers.

• If GST Collected from customers is less than GST Paid to suppliers then the Australian Tax Office owes money to the business.

• This is called GST Refund and is an Asset.

How GST Refund is calculated

Statement of Receipts and PaymentsBank at beginning 2,000ReceiptsFees 2,000GST Collected 200 2,200Less Payments 4,600Wages 1,000Rent 2,500GST Paid 250 4,000Bank at end 600

GST collected 200 less GST Paid 250 = GST Refund -50

Balance Sheets last for years

• The Assets or Liabilities or Owner’s Equity from one year will be carried forward to the next.

• The business buys new assets and some times sells them.

• A Loan is received and must be paid back.• The owner puts money into the business

(Capital) and takes some out (Drawings)

Balance SheetFirst Year

AssetsBank 1200Equipment 1500Debtors

3000Stock 9000Supplies

LiabilitiesLoan 9000

Owner’s EquityCapital 5000Net Profit 3000Drawings 2000 6000

Balance SheetSecond Year

1200Stock 7000Supplies

LiabilitiesLoan 5000

Loan is being repaid

Capital is

increasing

Equipment is increasing

Balance SheetThird Year

1500Stock 2500

Liabilities

Supplies have been used up and are gone.

Loans have been paid

Classify items from Statement of Receipts & Payments into

• Into the Profit & Loss Statement

• Revenue

• Less Expenses

• Into the Balance Sheet

• Asset = Liabilities + Owner’s Equity

Open“How to prepare a Balance Sheet”

Open Income to Balance Sheet

Balance Sheets Assets = Liabilities + Owner’s Equity.

Documents

Transcript of Balance Sheets Assets = Liabilities + Owner’s Equity.

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