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In today’s Business Studies class, We will be learning about the Balance Sheet. We hope you enjoy the class!
A balance sheet can be defined as a statement showing the assets and liabilities of the business as at a given date. A balance sheet is not an account and so it does not have debit or credit side. Also, it does not have balance brought down or balance carried down.
CLASSIFICATION OF ASSETS AND LIABILITIES
Assets: These are the valuable resources of a business. Among these resources, we have the ones that are more permanent in nature and others less permanent. The more permanent assets e.g. land and buildings, office equipment plant and machinery furniture and fittings, motor vehicles, etc are referred to as fixed assets. The less permanent ones are referred to as current assets. Examples of current assets are stock, trade debtors, bills receivable cash at bank, cash in hand, etc.
Capital: This is worth the business owes the owner of the business. In other words, capital is the amount which is used to establish a business.
Current Liabilities: are the debts a business owes outsiders which should be repaid within one year. Examples are trade creditors, bank overdraft, accrued expenses, bills payables, etc. A format of a balance sheet is as follows:-
- Define a balance sheet
- List four examples of fixed assets
Read Business studies for JSS 3 by O. A. Lawal pages 86 to 90.
GENERAL REVISION QUESTIONS
- What is a trial balance?
- Where do you prove the accuracy of double-entry bookkeeping?
- Define balance sheet
- State three current liabilities
- List three current assets
- Balance Sheet is_____ A. Assets and liabilities B. income and expenditure of a business C. the principal book of account where all entries in the subsidiary books are posted to D. a statement showing the assets and liabilities of the business as at a given date
- An example of a fixed asset is A. debtors creditors C. motor van D. bills receivable
- _______ is a current asset A. Stock B. Furniture C. Drawings C. Bills payable
- _________ is a current liability A. Stock B. Machinery C. Drawings D. Bills payable
- The amount a business owes the owner(s) is called A. assets B. liabilities C. capital D. drawings
- Write short notes on (a) Assets (b) Liabilities (c) Drawings
- Prepare a format of a balance sheet with at least ten items.
We have come to the end of this class. We do hope you enjoyed the class?
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In our next class, we will be talking about Trading Account. We are very much eager to meet you there.
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