Assets and LiabilitiesSection 2 Objective 8

Give examples of different types of

assets and liabilities

Assets and Liabilities• Balance sheet– This financial statement gives a view of a business

financial position at the end of its financial period– The view highlights the accounting equation (balance

sheet equation) relationship• Assets = Capital (Equity)+ Liabilities

– Details given in the balance sheet are• Assets• Liabilities • Capital (Equity)

Assets and Liabilities• Assets are resources owned by the business– Examples of assets include• Cash in hand (notes and coins)• Cash in bank• Equipment• Fixtures and fittings• Inventory (known as stock)• Land• Premises• Accounts receivables (known as debtors or trade receivables)• Vehicles

Assets and Liabilities

• Suppose you are considering opening a barber shop or beauty salon….–What assets

would you need to start your business???

Assets and Liabilities• Liabilities are the amounts owed by

the business to other individuals or firms– Examples of liabilities include• Bank loans• Bank overdraft• Accounts payable (known as

creditors and trade payables)• Mortgage loans• Expenses owing (amounts unpaid

for goods or services)

Assets and Liabilities

• Suppose you are considering opening a barber shop or beauty salon….–What liabilities would you

need to start your business???

Assets and Liabilities• Capital (known as Equity) represents the investment

made by the owner, partners or other individuals in his or her business

• It is considered as the net value (worth) of the business

Assets and Liabilities

• Remember:

Assets and Liabilities

• Analyse the pictures on the next few slides and indicate whether each of them are–Assets • or

– Liabilities

Assets and Liabilities

Assets and Liabilities

Assets and Liabilities

Assets and Liabilities