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LESSON 7-2

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LESSON 7-2

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  1. LESSON 7-2 Balance Sheet Information

  2. 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

  3. Four Sections: • Heading (Who, What, When) • Divisions • Assets • Liabilities • Owner’s equity Division • Totals Balance Sheet

  4. 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?

  5. DATA OBTAINED FROM WORK SHEET

  6. 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:

  7. 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.

  8. WTG 7-2 OYO 7-2 Assignments