Balance sheet

Group 2
Members:
Abanto, Nikko Adrien
Inductivo, Kian Carlo
Martin, Duran
Toledana, Donato
Vinluan, Gilbert


Balance Sheet
What is a Balance Sheet?
- The balance sheet is a financial statement that shows
what the business is worth at one point in time.
-the basis for ratio analysis, to determine the liquidity of
a business.
Liquidity-essentially the ability to pay one's debts in a timely
manner.
Format of the Balance Sheet
Vertical Balance Sheet
all line items are presented down
the left side of the page. Begins with
asset line items, followed by liability
line items, and ending with
shareholders' equity line items
Horizontal Balance Sheet
asset line items are listed down the
first column and liabilities and equity
line items are listed in a later column.
Assets
Assets
Asset accounts usually start with the cash account and the
marketable securities account. Then, inventory, accounts
receivable, and fixed assets such as land, buildings, and
plant and equipment are listed.
Liabilities
Liabilities
The liability accounts on a balance sheet include both
current and long-term liabilities. Current liabilities are
usually accounts payable and accruals. Accounts
payable are usually what the business owes to its
suppliers, credit cards, and bank loans. Accruals will
consist of taxes owed including sales tax owed and
federal, state, social security, and Medicare tax on the
employees which are generally paid quarterly.
Current Liabilities
Payables. This is all trade payables related to
the purchase of goods or services from
suppliers.
Accrued expenses. This is expenses incurred
by the business, for which no supplier
invoice has yet been received.
Short-term debt. This is loans for which
payment is due within the next year.
Unearned revenue. This is advance payments
from customers that have not yet been earned
by the company.

Owners Equity
Equity
The equity accounts include all the claims the owners have
against the company. Clearly, the business owner has an
investment and it may be the only investment in the firm. If
the firm has taken on other investment, that is considered
here as well.

Assets = Liabilities + Shareholders' Equity
Difference between capital and owner's
equity?
Capital is the amount of property a person owns
and has complete access to while Owner's equity
applies to the amount of a loan that a purchaser has
paid down, for instance: the amount of the property
the purchaser owns free of loans.