Transcript: The amount of long-term money put into the business to buy assets Fixed Assets ex: machinery Balance Sheet The balance sheet shows us the assets and liabilities of a company at a point it time. Money invested in the business by the owners http://www.tutor2u.net/business/gcse/finance_balance_sheet.htm Profit and loss reserves: Share capital (owners money) What is it? Profits that are still due to be given out to owners as dividends. This money may not necessarily be held in cash, but may have been used to buy more stock or fixed assets. What it owns (assets): Vehicles Real estate Office furniture By:Sanat Kapila Capital: Bibliography: Current Assets: Stocks Debtors Cash Long term bank loans Share capital: Assets What it is owed: Money from debtors Working capital = current assets - current liabilities Current liabilities: Creditors Bank overdraft What it owes (liabilities): Loans Mortgage Liabilities Shareholders funds = share capital + reserves
Transcript: A businesses' long-term assets may include: Long-term investments Fixed assets Intangible assets (goodwill or intellectual property) What is it??? A basic financial statement Thank you! What makes up a balance sheet? A balance sheet is a financial statement that shows how a business is doing financially at a specific time interval, consisting of a businesses' asset, liability, and owner equity accounts. It shows what a business owns at the moment, what it owes to other individuals, and how much capital it has invested. It may or may not show how much stock is invested, as well. Sample Balance Sheet Assets are the business' property or whatever the business owns legally. Assets are listed by liquidity (how quickly it can be profited from), and are divided into current assets and long-term assets. Assets Liabilities Owner's Equity Shareholder's Equity Owner's Equity or Shareholder's Equity Assets? contd. Owner's Equity is what the owner has invested into the business. Shareholder's Equity is what other companies have invested into the business. A businesses' current assets may include: Cash or Cash equivalents Receivables Inventory Prepaid Expenses Liabilities are debts or what the companies owes to other third party entities. They're divided into current liabilities (what is dues within the year) and long-term liabilities (what is due in years to come). Liabilities? Balance Sheet Assets?
Transcript: The trading and profit and loss account shows the profit that a business has earned in a particular year, the balance sheet shows what the business is truly worth and what makes up its value. It starts with a comparison of the items of value within the business (its assets) and the money that it owes (its liabilities). It can be defined as an overview of a company's financial position on a particular date showing its total assets and liabilities. Vertical presentation More common these days to use the vertical format. This layout adopts the following basic pattern: Intangible assets (such as goodwill) + Fixed assets (such as premises and equipment) + Current assets (such as cash and stocks) - Current liabilities (such as amounts owed to creditors or overdrafts) - Long-term liabilities (such as bank loans) = Net assets Capital employed Opening capital (the amount the owner invested to start the business) + Net profits (transferred from the profit and loss account) = The same figure as net assets - when these two figures are equal the accounts balance Comprise the capital items of value that the business has bought and will use for an extended period of time, such as buildings, machinery, equipment and vehicles. These are often referred to as tangible fixed assets. Note that fixed assets are usually listed in order of permanence, meaning the most permanent assets are first followed by those that are more likely to deteriorate and depreciate. Intangible assets Occasionally you will see an item in the fixed assets section entitled 'Goodwill'. This is an example of an intangible fixed asset. Goodwill does not represent an item of value but arises when a new owner pays above the book value of the business for its good reputation. Current assets This is the second section in the balance sheet and it contains assets that are readily available in the company for paying debts. This generally includes stocks, debtors, money in the bank and cash held on the premises. Current liabilities The third section in the balance sheet contains amounts that are owed to suppliers or lenders which are due to be repaid fairly shortly (normally within one year); these are known as current liabilities. This will typically contain creditors, bank overdrafts, VAT and loans that are due to be repaid in less than one year. Working capital (also known as net current assets or current capital) Measures how much a business has available to pay bills. Working capital is calculated by deducting current liabilities (those debts to be paid shortly) from current assets (money that is readily available). The result should be a positive figure, otherwise the business may find it hard to meet its debts. Long-term liabilities This section contains those debts that have to be paid for in more than one year's time, such as a mortgage on company property or a long-term bank loan. Net assets This is the difference between the total assets of the business and its total liabilities. It is the figure to which the accounts should be balanced. As long as the final section (capital employed or financed by) of the accounts results in the same figure, then the accounts are deemed to balance. Capital employed or financed by The final section of the balance sheet shows where the money came from to run the business; in the final accounts for a sole trader this will typically be capital introduced by the owner and retained profits from previous years of trading. Balance sheet for a sole trader This follows the example of Johnny Franks. Look back at the trading and profit and loss account for Johnny now to refresh your memory. The following figures have also been extracted from his records in order to complete the balance sheet: Debtors £3,970, Bank £0, Cash £275, Creditors £3,200, Overdraft £3,370, Bank loan £32,000, Opening capital £58,750, Drawings £18,700 Fixed assets Balance Sheet
Transcript: Current Assets Financial Obligations Assets Listed in order of Liquidity Current Liabilities Liabilities & Equity Long-term Assets Balance Sheet May be converted to cash within one year Firms Holdings Firms Obligations Point of time Cumulative Uses 3 of the 5 areas of accounting Preferred Stock Common Stock Retained Earnings Stockholder's Equity Due within one year Not due within one year Basic Info Long-term Liabilities Might be converted in to cash after a year
Transcript: Assets, liabilities and owners equity Where does the balance sheet come from? Balance Sheet The balance sheet allows you to easily determine the amount of a company's working capital and whether the company is highly leveraged. A balance sheet is a financial statement that shows the position of a company on a given date What sections are in the balance sheet? The balance sheet for your company gives indications to the performance of your business and lists obligations that could affect your bottom line example what does the balance sheet show? what does the balance sheet do? What is the Balance Sheet? Assets = Liabilities + owners Equity
Transcript: Current Assets over the years $86,865,270 2014 2013 78.1% $85,902,496 $9,848,756 Capital Assets: accounts for 78 % of the Total Assets for the University. This includes property, movable or immovable, tangible or intangible, and fixed assets 2013 Restricted cash and cash Equivalents Accounts Liability: from 2013 to 2014 went up 26%. This account shows the amount a company owes for items or services purchased on credit and due withing one year $107,959,026 20.1 % Short-term investments: account for 21% of the Universities Total Assets for 2014. This account contains any investment that the University has made that will expire within one year $3,021,042 $0 2012 Net Position From 2010-2014 Scholarships and fellowships $0 It has a positive effect on net position, similar to Assets Claims Liability for losses and LEA $88,064,407 Non Current Assets 21.9% Leases receivable Liabilities Long-term debt obligations Other post-employment Benefit obligation Accounts Payable Noncurrent Assets Pledges receivable $3,944,050 Current Liabilities Non Current Liabilities $0 Grants refundable $218,460 Debt service 2014 $30,451,366 Other long-term investments Endowment Investment $0 Equity Total Net position 2014 $0 $54,473 Capitalized lease obligations 2012 Cash and cash equivalents $276,656,423 Capital assets $268,375,247 Also new to accounting Net investment in capital assets $55,599,557 Accrued compensated absences Loans Research $234,809 $211,504,932 Pledges receivable Other $0 Assets Other Liabilities $0 2014 E $0 Depository Accounts $413,310,808 $707,938 $0 $0 $3,021,042 This is an acquisition of net assets by the University that is applicable to a future reporting period Accounts receivable $0 Assets - this is the part of the balance sheet that represents the resources, that can be measured and can be expressed in dollars, that are owned by the University. Assets are made up of: Current Assets Non-Current Assets The Debt Ratio shows the University's ability to pay off its liabilities with its assets. Currently the University must sell 35 % of its assets to pay for its liabilities This is a consumption of Net assets by the University that is applicable to a future reporting period. This account sits in between Liabilities and Net Position Equity -represents the institution's interest in the assets of the University. The University's interest is the part of assets that is left after all liabilities are paid. Leases receivable 20.4% Unrestricted - Student loans receivable $1,437,112 Notes Receivable Other assets 2014 $90,664,114 Deferred Outflows of Resources Liabilities - are obligations and amounts owed to lenders and suppliers Liabilities are made up of Current Liabilities Non Current Liabilities $0 Capitalized Lease obligations $90,644,114 + $5,083,612 2012 $2,501,978 79.9% $0 $116,246,921 Long-term debt obligations Restricted for Nonexpendable -endowments 2013 Accounts receivable $3,021,042 Accrued compensated absences $565,212 California State University, San Bernardino -Statement of Net Position Accrued Salaries and benefits payable $285,716,469 $0 Short-term Investments $0 L $2,779,489 More than 1 year $16,733 Current assets Roughly New to Accounting This account sits after assets and before Liabilities. Unearned Revenue Capital projects Other Liabilities Claims liability for losses and LEA $2,235,675 $268,375,247 Accounts Liability From 2013 to 2014 2013 Depository accounts $296,149,215 $0 $3,450,004 Notes Receivable $1,042,375 $428,363 $277,183 Debt Ratio= Total Liabilities Total Assets $1,002,622 2010 It has a negative effect on net position, similar to Liabilities 79.6 A Expendable Unearned revenue = $320,607,099 Deferred inflows of Resources $0 $0 Balance Sheet $6,051,922 2011 1 year period $0 Current Assets $296,778,099 Prepaid Expenses and other assets
Transcript: Double Entry Accounting Accounting is the system of recording business transactions and analyzing, verifying, and reporting the results. the function of accounting is to keep a record of transactions and create regular financial statements. GAAP are principles that guide the recording of business transactions so that the person who reads them can understand it. Fiscal Period is the period of time for which a business summarizes accounting info. and prepares financial statements. Balance Sheet: The financial strength of the business -Shows the liablities and assets. A snapshot of the financial condition of the business for a specific date. Cash Flow Statement: how cash is flowing in and out of a business. 1.identify the accounts 2.record the transaction 3.record the debit 4.record the credit 5.journalize the transactions 6.record it in the general ledger. What is a balance sheet? Proprietary card, credit card, and debit card, gets a receipt with the last 4 digits of the card used for payment By: Mariana A. Rodriguez, Danielle Carreon, and Eduardo Balandrano The following items are important to maintain: Checking account-have enough money to pay your bills. Source documents-track all your transactions. Pay roll-maintain accurate info. of employees. Inventory-keep all merchandise inventory record up to date. Assets-keep all assets that the business owns. A transaction that merchandise will be purchased at a later date. it is know as an acount payable ehich are considered liabilities. Business Entity is an organization that exists independently of the owner's personal finances. Cash Basis recognizes revenue when it is received and expenses when they are paid. The Accrual Basis of accounting records revenues and expenses when they occur. group of acounts are called ledgers Credit Sales Sale on account is a transaction when cash for the sale will be received on a later date. this is acounts receivable which is considered assets. Sales on Account Accounting Basics diffrent types of journals Video Income Statement: Shows the revenue and expenses of a business for a specific time period and shows a net income or net loss. Owner's Equity Statement: Summarizes changes in the owner's equity a fiscal period Chapter 17: Accounting Double Entry Accounting Keep Accurate Records Income and Equity Statements Sales on Account Accounting Basics Ledgers Financial Statements
Transcript: ⦁ The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses. Two forms of balance sheet exist. They are the report form and the account form. Individuals and small businesses tend to have simple balance sheets. Larger businesses tend to have more complex balance sheets, and these are presented in the organization's annual report. Large businesses also may prepare balance sheets for segments of their businesses. A balance sheet is often presented alongside one for a different point in time (typically the previous year) for comparison. Brief Tutorial Owner's Equity—along with liabilities—can be thought of as a source of the company's assets. Owner's equity is sometimes referred to as the book value of the company, because owner's equity is equal to the reported asset amounts minus the reported liability amounts. Liabilities are obligations of the company; they are amounts owed to creditors for a past transaction and they usually have the word "payable" in their account title. Along with owner's equity, liabilities can be thought of as a source of the company's assets. They can also be thought of as a claim against a company's assets. For example, a company's balance sheet reports assets of $100,000 and Accounts Payable of $40,000 and owner's equity of $60,000. The source of the company's assets are creditors/suppliers for $40,000 and the owners for $60,000. The creditors/suppliers have a claim against the company's assets and the owner can claim what remains after the Accounts Payable have been paid. Liabilities also include amounts received in advance for future services. Since the amount received (recorded as the asset Cash) has not yet been earned, the company defers the reporting of revenues and instead reports a liability such as Unearned Revenues or Customer Deposits. CEM 115-1 / A3 ⦁ A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. ⦁ Assets = Liabilities + Shareholders' Equity ⦁ It's called a balance sheet because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders' equity) ⦁ Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt. Balance sheet Types Assets are things that the company owns. They are the resources of the company that have been acquired through transactions, and have future economic value that can be measured and expressed in dollars. Assets also include costs paid in advance that have not yet expired, such as prepaid advertising, prepaid insurance, prepaid legal fees, and prepaid rent. Balance Sheet Presented by : Group 2 Tanilon , Czar Julian Javier , Patrick Erasmo , Russel Paguirigan , Rome Eduarte , Emmanuel Account form Owners / Stockholders Equity Liabilities Report form Assets
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