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How To Prepare The Balance Sheet

1. The document describes several transactions that affect the balance sheet of a company. Assets, liabilities, and equity accounts are adjusted for events like taking a loan, making purchases/sales, and receiving/paying debts. 2. Each transaction is recorded by increasing/decreasing relevant asset/liability/equity accounts, keeping the balance sheet in balance. 3. The goal is to accurately reflect all business activities and the company's financial position through proper accounting adjustments in the balance sheet.

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Mohammad Sahili
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Download as PDF, TXT or read online on Scribd
18 views

How To Prepare The Balance Sheet

1. The document describes several transactions that affect the balance sheet of a company. Assets, liabilities, and equity accounts are adjusted for events like taking a loan, making purchases/sales, and receiving/paying debts. 2. Each transaction is recorded by increasing/decreasing relevant asset/liability/equity accounts, keeping the balance sheet in balance. 3. The goal is to accurately reflect all business activities and the company's financial position through proper accounting adjustments in the balance sheet.

Uploaded by

Mohammad Sahili
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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 the liabilities that represents the

debt will increase by 50 000.


(the equity is available to the
company and is indebted to the Assets Liabilities
founders or the company and
remains there as long as that Bank 50 000 Equity 50 000
company exists).
 this sum was deposited in the
bank account of the company,
which will increase the assets
(representing assets) by the
same amount (50 000)
 The bank account will
decrease by 4000 and Assets Liabilities
will become 50 000 -
4000 = 46000 Bank
Fund
46 000
4 000
Equity 50 000
.
50 000 50 000

 The fund account was


zero and will increase
by 4000
 In this case we have two
separate operations to be
transcribed in the
balance sheet: Assets Liabilities

1. We have a debt to the Goods 6 000 Equity 50 000


provider 6000, which Bank 46 000 Providers 6 000

will increase our


Fund 4 000 .
56 000 56 000
liabilities by the same
amount at the account
level Providers.
2. The purchase of goods
will also increase our
assets in 6000 at the
account level goods.
 This operation will be
reduced to 3 000 $ debt Assets Liabilities

vis-à-vis the supplier and Goods 6 000 Equity 50 000


the other side of our bank Bank 43 000 Providers 3 000
account will decrease the Fund 4 000 .
53 000 53 000
same amount and will be 43
000 $
 The assets of the bank
account fell by 2 000 and
becomes 41 000.
Assets Liabilities

 The fund is decreased by Furniture 3 000 Equity 50 000


1000 and become 3000. Goods 6 000 Providers 3 000
Bank 41 000 .
Fund 3 000 53 000
 The company receives the 53 000
furniture which causes the
increase of assets of 3 000$
at the new "furniture" in
addition to the asset.
 We add "machines" in Assets Liabilities

addition to the balance Machines 2 000 Equity 50 000


sheet with $ 2 000. Furniture 3 000 Providers 3 000
Goods 6 000 .
Bank 41 000 53 000
 The amount of fund goes Fund 1 000
from 3 000-1 000
53 000
 The amount of goods
decreased by 1 500$ Assets Liabilities

Machines 2 000 Equity 50 000

Karim has a claim on the


Furniture 3 000 Providers 3 000
 Goods 4 500 .
client which will be Customer 1 500 53 000

illustrated by a new "clients"


Bank 41 000
Fund 1 000
in addition to the asset with 53 000

the amount of 1 500$

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