balance sheet
DESCRIPTION
Presentation on balance Sheet by Marrium Ishaq (MBA) Preston UniversityTRANSCRIPT
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BALANCE SHEET
Presented by
Marrium Ishaq
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What is a balance sheet?
The balance sheet is a financial statement also called a ‘Position’ Statement showing the position of a business at a particular date.
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A Balance sheet comprises of three items in heading:
• The name of the business
• The name of the Financial Statement
• The date of the balance sheet
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The Balance sheet has three distinct sections:
• Assets
• Liabilities
• Owner’s Equity
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Assets
•Assets are all those things a company owns which are of value to the business. Assets can be classified as:
• Current Assets
• Fixed Assets
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CURRENT ASSETS
Current assets mean that the assets will not stay in the business for long.
Examples: Materials Debtors Petty cash
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FIXED ASSETS•These are assets that the business owns.
•They are kept as a assets for several years that is why they are called fixed assets. Examples: Buildings Machinery Vehicles
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Liabilities
•Liabilities are all those things for which the company eventually needs to pay. Liabilities can be classified as:
Current liabilities
Long Term Liabilities
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Current Liabilities need to be paid within one accounting year.
Examples are: Outstanding rent
Accounts Payable
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Long Term Liabilities are those liabilities which will not be paid during the current accounting year.
Examples are: Long term debts
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OWNER’S EQUITY
Owner's equity may also be referred to as the residual of assets minus liabilities. These references make sense if you think of the basic accounting equation:
Assets = Liabilities + Owner's Equity
and just rearrange the terms:
Owner's Equity = Assets - Liabilities
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Equity is ownership in any asset after all debts associated with that asset are paid off. For example, a car or house with no outstanding debt is considered the owner's equity because he or she can readily sell the item for cash.
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The key principle of a balance sheet
All assets
+ Owner’s Equity
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