Balance Sheets Assets = Liabilities + Owner’s Equity.

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Balance Sheets Assets = Liabilities + Owner’s Equity

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

Page 1: Balance Sheets Assets = Liabilities + Owner’s Equity.

Balance Sheets

Assets = Liabilities + Owner’s Equity

Page 2: 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

Page 3: Balance Sheets Assets = Liabilities + Owner’s Equity.

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

Page 4: Balance Sheets Assets = Liabilities + Owner’s Equity.

Balance Sheet

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

Page 5: Balance Sheets Assets = Liabilities + Owner’s Equity.

Classifying Revision

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

Page 6: Balance Sheets Assets = Liabilities + Owner’s Equity.

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.

Page 7: Balance Sheets Assets = Liabilities + Owner’s Equity.

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

Page 8: Balance Sheets Assets = Liabilities + Owner’s Equity.

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.

Page 9: Balance Sheets Assets = Liabilities + Owner’s Equity.

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

Page 10: Balance Sheets Assets = Liabilities + Owner’s Equity.

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)

Page 11: Balance Sheets Assets = Liabilities + Owner’s Equity.

Balance SheetFirst Year

AssetsBank 1200Equipment 1500Debtors

3000Stock 9000Supplies

1300

15000

LiabilitiesLoan 9000

Owner’s EquityCapital 5000Net Profit 3000Drawings 2000 6000

15000

Page 12: Balance Sheets Assets = Liabilities + Owner’s Equity.

Balance SheetSecond Year

AssetsBank 1000Equipment 2000Debtors

1200Stock 7000Supplies

1800

13000

LiabilitiesLoan 5000

Owner’s EquityCapital 6000Net Profit 4000Drawings 2000 8000

13000

Loan is being repaid

Capital is

increasing

Equipment is increasing

Page 13: Balance Sheets Assets = Liabilities + Owner’s Equity.

Balance SheetThird Year

AssetsBank 7000Equipment 3000Debtors

1500Stock 2500

14000

Liabilities

Owner’s EquityCapital 8000Net Profit 8000Drawings 2000 14000

14000

Supplies have been used up and are gone.

Loans have been paid

off.

Page 14: Balance Sheets Assets = Liabilities + Owner’s Equity.

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

OR

Page 15: Balance Sheets Assets = Liabilities + Owner’s Equity.

Open“How to prepare a Balance Sheet”

Page 16: Balance Sheets Assets = Liabilities + Owner’s Equity.
Page 17: Balance Sheets Assets = Liabilities + Owner’s Equity.

Open Income to Balance Sheet


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