Balance Sheets

Balance sheets are financial statements that record the assets and liabilities of a business at a specific point in time

Assets – items owned by a business

Fixed assets – items owned by a business expected to be retained for at least one year e.g. buildings

Current assets – items that are expected to be turned into cash in the next year e.g. cash, stock

Liabilities – monies owed by a business

Current liabilities – debts owed by the business payable within a year e.g. creditors

Long term liabilities – debts owed by the business which wont be repaid within the next year e.g. bank loan

Balance Sheet Rules

Assets = Liabilities

Total Assets = Fixed assets + current assets

Liabilities = Share capital + borrowings + other creditors + reserves