The Balance Sheet Made easy

1. The Balance Sheet Made easy How to set out a Balance Sheet. Use with the ‘best selling guide’.

2. Balance Sheets are ALWAYS set out in the same way. You must learn this, and then it is easy to answer questions on them.

3. We always start with Fixed Assets. Theses are things you own and will kep fo more than a year. Fixed Assets Buildings 1,000,000 Machines 500,000 Vehicles 150,000 Fixtures & Fittings 50,000 1,700,000

4. In limited Companies you will usually see them as a total rather than itemeised WHY? Fixed Assets 1,700,000

5. We then need to subtract the depreciation. This means the Bal Sheet reflects the true value of the assets. Fixed Assets 1,700,000 Less Depreciation 200,000 Net book Value 1,500,000

6. We then add in any intangible assets. E.G. Trademarks, brands or goodwill Fixed Assets 1,700,000 Less Depreciation 200,000 Net book Value 1,500,000 + Intangible assets 500,000 2,000,000

7. Then you add in current assets. Things you own but will use up within the year. Fixed Assets 1,700,000 Less Depreciation 200,000 Net book Value 1,500,000 + Intangible assets 500,000 2,000,000 Current Assets Stock 100,000 Debtors 400,000 Cash 200,000 700,000

8. Then you subtract the current liabilities. Things you owe but will pay within the year. Fixed Assets 1,700,000 Less Depreciation 2,000,000 Net book Value 1,500,000 + Intangible assets 500,000 2,000,000 Current Assets Stock 100,000 Debtors 400,000 Cash 200,000 700,000 Less: Current Liabilities Creditors (150,000) Overdraft (50,000)

9. Next we subtract current liabilities from the current assets. This gives us Working Capital Fixed Assets 1,700,000 Less Depreciation 200,000 Net book Value 1,500,000 + Intangible assets 500,000 2,000,000 Current Assets Stock 100,000 Debtors 400,000 Cash 200,000 700,000 Less: Current Liabilities Creditors (150,000) Overdraft (50,000) Working Capital 500,000

10. To finish the top half we add working capital to the fixed assets. This gives us Net Assets. Fixed Assets 1,700,000 Less Depreciation 200,000 Net book Value 1,500,000 + Intangible assets 500,000 2,000,000 Current Assets Stock 100,000 Debtors 400,000 Cash 200,000 700,000 Less: Current Liabilities Creditors (150,000) Overdraft (50,000) Working Capital 500,000 Net Assets 2,500,000

11. The 2nd ½ shows how all of this was paid for. Loan, Owners capital and reserves Fixed Assets 1,700,000 Less Depreciation 200,000 Net book Value 1,500,000 + Intangible assets 500,000 2,000,000 Current Assets Stock 100,000 Debtors 400,000 Cash 200,000 700,000 Less: Current Liabilities Creditors (150,000) Overdraft (50,000) Working Capital 500,000 Net Assets 2,500,000 Shareholders funds Share Capital 1,500,000 Reserves 700,000 Bank loan 300,000 Capital Employed 2,500,000

12. Capital Employed is the same as Net Assets. They BALANCE! Fixed Assets 1,700,000 Less Depreciation 200,000 Net book Value 1,500,000 + Intangible assets 500,000 2,000,000 2,000,000 Current Assets Stock 100,000 Debtors 400,000 Cash 200,000 700,000 Less: Current Liabilities Creditors (150,000) Overdraft (50,000) Working Capital 500,000500,000 Net Assets 2,500,000 2,500,000 Shareholders funds Share Capital 1,500,000 Reserves 700,000 Bank loan 300,000 Capital Employed 2,500,0002,500,000