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Balance Sheet

The document outlines a balance sheet for a computer manufacturer, detailing assets such as plant and machinery, shares, and cash, as well as liabilities including an overdraft and tax bills. It explains the concepts of fixed assets, current assets, current liabilities, and long-term liabilities, emphasizing the importance of balance sheets in assessing a firm's financial health. Additionally, it provides a framework for categorizing and calculating total assets and liabilities to ensure they balance.

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Samm Dass
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4 views2 pages

Balance Sheet

The document outlines a balance sheet for a computer manufacturer, detailing assets such as plant and machinery, shares, and cash, as well as liabilities including an overdraft and tax bills. It explains the concepts of fixed assets, current assets, current liabilities, and long-term liabilities, emphasizing the importance of balance sheets in assessing a firm's financial health. Additionally, it provides a framework for categorizing and calculating total assets and liabilities to ensure they balance.

Uploaded by

Samm Dass
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Balance Sheet 04/11/04

Q1. State which of the following are assets or liabilities for a computer
manufacturer?
a) Plant and machinery used to manufacture the computers.
b) An overdraft, taken out from Lloyds Bank
c) Shares which it owns in a microchip producer
d) The tax bill which the business has been sent to be paid next year.
e) Dividends for the shareholders
f) Cash which it holds in a deposit account at the Alliance and Leicester
Company.
g) Shareholders’ investment.

Q2. UNDERSTANDING A BALANCE SHEET


A Balance Sheet shows a list of values of all the things a firm owns (ASSETS), and a
list of the monies that a firm owes to others (LIABILITIES). Although it might
sound unlikely at first, assets and liabilities will equal each other on a balance sheet.
A balance sheet is one of the most important documents that a firm produces as it can
tell us a lot about how much money the firm is worth, and the state of its financial
health. Which groups of people would find Lund Toys’ balance sheet useful?

Use the space to explain what is meant by: Lund Toys at 25th March 2001
Fixed Assets? Fixed Assets £
Buildings 2,000
Motor Vehicles 750
2750

Current Assets? Current Assets


Stocks 400
Debtors 1,200
Cash in bank 120
Cash in firm 40
1,760

Current Liabilities? Current Liabilities


Creditors 900
Balance Sheet 04/11/04

Long Term Liabilities? Long Term Liabilities


Bank loan 1,000

Fill in the figures on the


lines
Working Capital? (Also known as Net Current Value of Working Capital
Assets)

A Creditor? Total Assets


Minus
Total Liabilities

A Debtor? The firm is worth


Financed by:
(Where the money has come from)
Capital (money to start the 2,100
firm)

Profit 510
Total =
Sometimes, a Balance Sheet is written in a ‘side by side’ style. Use this approach to
get both sides of the balance sheet to balance, by putting assets and liabilities in the
correct column. Remember that if a firm owes something, then it is a liability, even if
it owes it to the owner (for example, the case of profit).
Assets Liabilities
Fixed Assets £ £

Current Assets

Total Assets £4,510 Total Liabilities £4,510

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