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LESSON 7-2. Balance Sheet Information. Balance Sheet: reports financial information on a specific date Where do you get the information for the Balance Sheet? Work Sheet (balance sheet columns of the worksheet) Why use a Balance Sheet? Is the General Ledger easy to read?

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lesson 7 2

LESSON 7-2

Balance Sheet Information

balance sheet

Balance Sheet: reports financial information on a specific date

  • Where do you get the information for the Balance Sheet?
    • Work Sheet (balance sheet columns of the worksheet)
  • Why use a Balance Sheet?
    • Is the General Ledger easy to read?
    • Do you know if the Assets = Liabilities + OE?
      • Balance sheet makes information easier to report and understand
      • Debits & credits are easily verified
      • Report the financial condition of the company
      • Needed to make good business decisions
Balance Sheet
balance sheet1

Four Sections:

    • Heading (Who, What, When)
    • Divisions
      • Assets
      • Liabilities
      • Owner’s equity Division
    • Totals
Balance Sheet
accounting equation

Income Statement reports what?

    • Net Loss or Net Income
  • Balance Sheet reports what?
    • Information about elements of the accounting equation
  • What is the accounting equation?
    • Assets = Liabilities + Owners Equity
  • What side of the equation are Assets on?
    • Left
    • On the same side (left) for the Balance Sheet
  • What side of the equation are Equities on (Liabilities and Owners Equity)?
    • Right – on the same side for the balance sheet
Accounting Equation?
slide6

6. Prepare Capital Section:

    • On Right side of Form
    • Title Section “Owners Equity” centered below Total Liabilities row
    • Enter Title of Capital Account at left with date
    • Calculate Capital Account
  • 8. Calculate Total Liab. And Owner’s Equity:
    • Single rule below capital account balance
    • Enter “Total Liab. And Owner’s Equity” title
      • Even with same line as Total Assets
    • Add the Total Liabilities and Capital Account
    • Balance should equal Total Assets or you have an error.

1. Create the Title - Who, What, When

  • 2. Prepare Assets Section:
    • On Left side of Form
    • Title Section “Assets” centered
    • Enter Titles of Asset account at the left
    • Enter balances in the first column
    • Draw single line after last asset account
  • 3. Prepare Total Assets:
    • Enter “Total Assets” On next line
    • Sum totals and double Rule
  • 4. Prepare Liabilities Section:
    • On Right side of Form
    • Title Section “Liabilities” centered
    • Enter Titles of Liability accounts at the left
    • Enter balances in the amount column
    • Draw single line after last liability account
  • 5. Prepare Total Liabilities:
    • Enter “Total Liabilities” On next line
    • Sum totals
  • 7. Calculate Total Capital:
    • Only report the current capital
    • If you have a Net Income
      • Capital Account +Net Income – Drawing Account Balance
      • Answer:
    • If you have a Net Loss
      • Capital Account – Net Loss – Drawing Account Balance
      • Answer:
owner s equity reported in detail on a balance sheet
OWNER’S EQUITY REPORTED IN DETAIL ON A BALANCE SHEET
  • 8. Calculate Total Liab. And Owner’s Equity:
    • Single rule below capital account balance
    • Enter “Total Liab. And Owner’s Equity” title
      • Even with same line as Total Assets
    • Add the Total Liabilities and Capital Account
    • Balance should equal Total Assets or you have an error.
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