Peter Piper Picked Pickled Peppers Balance Sheet as at 30th June 2007 1 ASSETS 4 LIABILITIES & OWNERS EQUITY 2 Current Assets 5 Current Liabilities Cash 2,100 Credit Card Closing Balance 1,700 Petty Cash 100 Accounts Payable 6,500 Debtors 2,500 Taxes Payable 1,000 Stock 5,000 Warranty Owing 500 Prepaid Insurance 1,500 Wages 500 Total Current Assets 11,200 Total Current Liabilities 10,200 3 Non Current Assets 6 Non Current Liabilities Motor Vehicles 15,000 Plant & Equipment 15,000 Business Loan 25,000 Less: Accum Depreciation -5,000 Total Non Current Assets 25,000 Total Non Current Liabilities 25,000 7 OWNERS EQUITY Retained Earnings 1,000 TOTAL ASSETS 36,200 TOTAL LIABILITIES 36,200 Note this two totals must balance in order for the balance sheet to be correct and balanced. 1 Assets Assets are subdivided into current and long-term assets to reflect the ease of liquidating each asset. Cash, for obvious reasons, is considered the most liquid of all assets. 2 Current assets Current assets are any assets that can be easily be consumed or converted into cash within 12 months. Examples of current assets would be cash, accounts receivable, and stock. 3 Non-Current Assets Non Current Assets are those assets less likely to be converted into cash or consumed within 12 months such as plant and machinery, equipment or motor vehicles. 4 Liabilities and owners’ equity This includes all debts and obligations owed by the business to outside creditors, suppliers or banks that are payable within one year, plus the owners’ equity. Often, this side of the balance sheet is simply referred to as “Liabilities.” 5 Current Liabilities Current liabilities are those liabilities that would in the ordinary course of business be due and payable within 12 months. These can include, credit card debts and accounts payable. 6 Non Current Liabilities These are any debts or obligations owed by the business that are due more than one year out from the current date. 7 Owners’ Equity Sometimes this is referred to as stockholders’ equity. Owners’ equity is made up of the initial investment in the business as well as any retained earnings that are reinvested in the business. It is the residual interest in the assets of the entity after the deduction of its liabilities.
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