Making Changes in the Balance Sheet

1. UNIT 1C A Lot to Learn Making Changes in the Balance Sheet

2. What changes can be made that will still keep the scales balanced? + + LIABILITIES ASSETS NET WORTH We can add the same value to both sides

3. THE SCALES ARE IN BALANCE - - ASSETS LIABILITIES NET WORTH when we take away the same value from both sides

4. THE SCALES ARE IN BALANCE + - LIABILITIES ASSETS NET WORTH when we increase one asset and decrease another by the same value

5. THE SCALES ARE IN BALANCE + - ASSETS LIABILITIES NET WORTH when we increase one liability and decrease another by the same value

6. When the scales are in balance the Balance Sheet will balance ie all assets - all liabilities will = net worth

7. Changes which don’t balance the scales + LIABILITIES NETWORTH + ASSETS If we increase 2 assets the balance sheet won’t balance

8. + + ASSETS LIABILITIES NET WORTH If we increase 2 liabilities the balance sheet won’t balance

9. - + LIABILITIES NET WORTH ASSETS If we increase an asset and decrease a liability the balance sheet won’t balance

10. - + ASSETS LIABILITIES NET WORTH If we increase a liability and decrease an asset the balance sheet won’t balance

11. Alan Sample Alan pays Dad back in cash Balance Sheet as as today’s date £ £ £ Fixed Assets: 200 Bike 150 CDs and Tapes 350 Current Assets: 100 Bank 10 20 Cash (-10) 120 110 Less Current Liabilities: 10 0 Owed to Dad (-10) 45 55 45 Owed to Bike Repair Shop 65 Working Capital £415 Net Worth Financed by: Net Worth £415 Still balances - decreased an asset and decreased a liability by same

12. Alan Sample Alan withdraws £20 cash from the bank Balance Sheet as as today’s date £ £ £ Fixed Assets: Bike 200 CDs and Tapes 150 350 Current Assets: 100 80 Bank (-20) 30 10 Cash (+20) 110 Less Current Liabilities: Owed to Bike Repair Shop 45 45 Working Capital 65 Net Worth £415 Financed by: Net Worth £415 Still balances! - increased one asset and decreased another asset

13. Alan Sample Alan borrows £30 cash from Mum Balance Sheet as as today’s date £ £ £ Fixed Assets: Bike 200 CDs and Tapes 150 350 Current Assets: 80 Bank 60 30 Cash (+30) 110 140 Less Current Liabilities: 30 Owed to Mum 75 Owed to Bike Repair Shop 45 45 Working Capital 65 Net Worth £415 Financed by: Net Worth £415 Still balances! – increased assets and increased liabilities by the same

14. Alan Sample Mum pays Bike Shop £20. Alan to pay mum back Balance Sheet as as today’s date £ £ £ Fixed Assets: Bike 200 CDs and Tapes 150 350 Current Assets: 80 Bank 60 Cash 140 Less Current Liabilities: 30 Owed to Mum (+20) 50 (-20) Owed to Bike Repair Shop 25 45 75 Working Capital 65 Net Worth £415 Financed by: Net Worth £415 Still balances! – increased a liability, decreased another by the same

15. QUIZ Do the following changes balance the balance sheet or not? YES NO Increasing 2 assets Decreasing assets and decreasing liabilities Increasing one asset and decreasing another Increasing a liability and decreasing an asset Increasing an asset and decreasing a liability Decreasing 2 liabilities Increasing one liability and decreasing another Increasing an asset and increasing a liability