Well look at this information in more detail after

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: I joined MITAS because I wanted real responsibili Please click the advert Real work Internationa al International opportunities ree wor o ree work placements Month 16 was I was a construction supervisor in the North Sea advising and helping foremen he solve problems s Download free ebooks at 24 Balance Sheet Managing Budgets 4. Balance Sheet 4.1 Introduction Now you’ve seen how the day-to-day recording of transactional information is recorded. But how do you put it into a format that can help you see the financial state of the organization? Can you just look at the budget and what has been spent in each category to this point in the year compared to what was intended to be spent? That’s one way to do it, but there’s an easier way - this is where the Balance Sheet comes in. It is a ‘snapshot’ of the finances of the business at one given time. The information given includes what the business owns and what it owes. There are three sections to the Balance Sheet: Assets – the items of value owned by the company Liabilities – the company’s obligations, whether to pay for or provide goods or services at a future date Equity – remembering our equation from Chapter 2, equity is the amount of net assets (assets – liabilities) A Balance Sheet gets its name from the fact that the total of the assets listed must equal the total of the liabilities and equity – in other words, the two sides of the sheet must balance. For an example of a Balance Sheet, see Figure 4. It’s a relatively simple example, since most businesses will have many more accounts under their assets, liabilities, and equity categories on their Chart of Accounts. But you can get the basic idea for how the information is shared via the Balance Sheet. 4.2 What a Balance Sheet Tells You There is good information on the Balance Sheet, such as: A summary of the organization’s assets and the claims against those assets as of a specific date. Information about the organization’s current ability to pay its current debts. You can only tell at the moment, for the liabilities...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online