Balance Sheet
Classify Accounts
Classify each as Asset, Liability, or Equity
Cash
Accounts Payable
Equipment
Capital
Loan Payable
Accounts Receivable
Accounts Payable
Equipment
Capital
Loan Payable
Accounts Receivable
Asset
Liability
Asset
Equity
Liability
Asset
Liability
Asset
Equity
Liability
Asset
Accounting Equation Practice
A business has
➧ Assets = 50,000
➧ Liabilities = 18,000
Task
Calculate Equity.
Equity = Assets − Liabilities
Equity = 50,000 − 18,000 = 32,000
Equity = 32,000
Prepare a Balance Sheet
The following balances exist on 31 December
Cash
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Loan Payable
Capital
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Loan Payable
Capital
8,000
4,000
20,000
5,000
6,000
9,000
12,000
4,000
20,000
5,000
6,000
9,000
12,000
Task
Prepare a Balance Sheet.
Balance Sheet
As at 31 December
Assets
➧ Current Assets
Cash ____ 8,000
Accounts Receivable ____ 4,000
Total Current Assets ____ 12,000
➧ Non-Current Assets
Equipment ____ 20,000
Less: Accumulated Depreciation ____ (5,000)
Net Non-Current Assets ____ 15,000
Total Assets ____ 27,000
Liabilities
➧ Current Liabilities
Accounts Payable ____ 6,000
➧ Long-Term Liabilities
Loan Payable ____ 9,000
Total Liabilities ____ 15,000
Equity
Capital ____ 12,000
Total Liabilities + Equity ____ 27,000
True or False
Balance Sheet shows financial position at a specific date.
➧ True
Expenses appear on the Balance Sheet.
➧ False
Assets must equal liabilities plus equity.
➧ True
Capital is a liability.
➧ False
Balance Sheet is prepared before Income Statement.
➧ False
Mini Case Study
A retail shop wants to know its financial position at year-end.
Questions
Which statement shows what the business owns and owes?
➛ Statement showing assets and liabilities | Balance Sheet
Name two current assets.
➛ Cash
➛ Accounts Receivable
Name one long-term liability.
➛ Loan Payable
Why must the balance sheet balance?
➛ Because Assets = Liabilities + Equity
Which statement provides net income used in equity?
➛ Income Statement
Quick Quiz
What does a Balance Sheet show?
➛ Financial position at a specific date
State the accounting equation.
➛ Assets = Liabilities + Equity
Equipment is a current asset.
➛ False
Which category does Accounts Payable belong to?
➛ Liability
Name one example of equity.
➛ Capital | Owner’s Equity
Statement of Owner’s Equity ➧ Here