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2.The Balance Sheet.doc

5 Pages

Rotman Commerce
Course Code
Stojanovic Dragan

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The Balance Sheet – Ch. 2 Fill in the Missing information below: • What is the Balance Sheet? • The Balance Sheet equation: Assets = Liabilities + Owner’s Equity; (A=L+O/E) • The purpose of Accounting • GAAP – what does it stands for? And what are GAAPs? 1. The Business Entity Principle 2. The Cost Principle • Accounting Terms 1. Accounts Receivable 2. Accounts Payable 3. Mortgage Payable Class-Work Complete the accounting terms in the Pick-up folder in Assignment 1 • Preparing a Balance Sheet 1. Heading 2. Steps 3. Things to note when preparing the B/S statement • Order of items on the Balance Sheet 1. Current Assets 2. Fixed Assets 3. Liabilities • Who would be interested in the Financial Statement of the Company? Do: Pages 12 – 14 Questions 1-12 Exercises 1-3 then 4-8Business Transactions A transaction is an event that occurs during the operation of a business and results in a financial change. A business transaction is always an exchange of things of value. Something of Value given up Transaction Something of Value received 1. The Balance Sheet – gives a detailed picture of the financial position of the business up to a certain date. 2. Transaction Analysis Sheet - is used to assist in the examination of a transaction. It looks at the effect of the transaction on the B/S 3. Accounting period – is the time used to complete the accounting cycle. It’s the length of time between the preparation of the financial reports e.g. monthly, annually (Calendar year, Fiscal year) st st - Calendar year – January 1 to December 31 of same year - Fiscal year – any 12 months of the year Complete the Following, using your own words: 1. Transaction Analysis Sheet 2. Accounting Period 3. Accounting Cycle 4. The Public Accountant - serve the public for a fee Electronic Calculating Tool • Using Spreadsheet • Formatting • Dragging Do: P. 16 – 22 Q. 13-16 E. 9 -11 Recording Transactions in T-Accounts T-Accounts are used to collect record and summarize the events that take place in individual accounts. For each item on the balance sheet we prepare an account, it is created in a T-form like the balance sheet. Balance Sheet Account
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