3.3.1

Balance Sheets

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Balance Sheets

A balance sheet covers a business' liabilities and assets at a certain point in time.

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Information on a balance sheet

  • Assets:
    • A balance sheet covers total current assets (e.g. stocks or cash).
    • It covers fixed assets (e.g. property).
  • Liabilities:
    • The balance sheet covers current liabilities (e.g. short term loans from creditors).
    • It also covers long term liabilities (e.g. loans from the bank).
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Purpose of a balance sheet

  • The balance sheet shows:
    • What a business possesses.
    • What the business is owed by debtors.
    • What the business owes to creditors and shareholders.

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