Lesson 4 Balance Sheets Li, Jialong 2011-2-26. The Accounting Equation The Basic Rule for all...
-
date post
22-Dec-2015 -
Category
Documents
-
view
213 -
download
1
Transcript of Lesson 4 Balance Sheets Li, Jialong 2011-2-26. The Accounting Equation The Basic Rule for all...
Lesson 4
Balance Sheets
Li, Jialong
2011-2-26
The Accounting Equation
The Basic Rule for all accounting is the Accounting Equation.
Assets = Liabilities + Owners Equity
Example: Let’s see how a business can change and how these changes
effect the business’s accounting equation.
What happened to Sally’s Shoe business?
The Balance Sheet
Definition: the Balance Sheet is a report which shows in a statement form the relationship between Assets, Liabilities and Owners Equity at a point in time.
The report further refines the information by classifying Assets and Liabilities into CURRENT AND NON-CURRENT types.
The Basic format for a BALANCE SHEET
Notes: An Income Statement or P&L has to be completed before a Balance Sheet can be completed as the NET PROFIT balances the two reports together.
Review the example of the following two financial reports below and note how the Net Profit links the two.
Review Questions
Definition and format of a Balance Sheet
Definition of Current and Non-Current Assets and Liabilities
Format of a Balance Sheet and defining Net Assets.
Exercises
Exercises 4.1
Exercises 4.2
Reading and Resources
Student Notes and Readings Lesson 4
The End of Lesson 4