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Balance Sheet

Balance Sheet. Record Keeping Curriculum Georgia Department of Education Agricultural Education Written by Jimmy Scott Georgia Ag Ed Curriculum. Balance Sheet - Defined.

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Balance Sheet

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  1. Balance Sheet Record Keeping Curriculum Georgia Department of Education Agricultural Education Written by Jimmy Scott Georgia Ag Ed Curriculum

  2. Balance Sheet - Defined The Balance Sheet is a summary of how funds are invested in the business (assets) and the financing methods (liabilities or debt, and equity or net worth) used. View the Balance Sheet as a snapshot of the business’s financial situation at a point in time. 1

  3. Answers Five Questions • Do total assets exceed total liabilities? (solvency) • Will the firm meet immediate financial obligations? (liquidity) • How much loss could the business sustain? (risk-bearing capacity) • What collateral is available to support a loan? • How have business trends changed over time? 2

  4. Balance Sheet Liabilities + Assets Owner Equity 3

  5. Assets • Current Assets • Cash or other assets which can be converted to cash through the normal operations of the business during the year. Current assets are: • Checking and/or savings accounts • Inventory held for resale • Non-Current Assets • Assets used in producing a product or are not sold and not converted into cash within one year. Non-Current assets are: • Tractors • Barns • Breeding Stock 4

  6. Liabilities • Current Liabilities • Debts due within the operating year. Current liabilities are: • Accounts payable • Rents • Notes payable – current portion • Non-Current Liabilities • Debts due in more than one year. Non-Current liabilities are: • Notes payable – non-current portion 5

  7. Owner Equity • Assets • Anything of value owned by or owed to the business on the date the balance sheet is completed. • Liabilities • Any financial commitment owed by the business on the date the balance sheet is completed. • Owner Equity • Total Assets – Total Liabilities = Owner Equity 6

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