Lesson 7 2
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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

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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?


Data obtained from work sheet

DATA OBTAINED FROM WORK SHEET


Lesson 7 2

  • 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.


Assignments

WTG 7-2

OYO 7-2

Assignments


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