simple balance sheet

Classified Balance Sheet

Section 2 Objective 9

o Arrange assets and liabilities in order of • Permanence• Liquidity

o Prepare balance sheet

Classified Balance Sheet• The Balance Sheet shows

a listing of a firm’s assets, liabilities and capital at a particular date

• Assets and Liabilities in a balance sheet are classified and shown in categories

• The assets and liabilities can be arranged in order of permanence or liquidity

• Assets– Assets are classified into two

categories. • Current assets are assets

owned by the business for a short period time. They are quickly turned into cash within one year. Examples of current assets include cash in hand, cash at bank, inventory and accounts receivable (debtors)

• Non-currents assets are those which a business intends to keep and used to generate income for a long period of time (for more than one year). Examples of non-current assets include premises, machinery, equipment and vehicles


• Liabilities– Liabilities are classified

into two categories. • Current liabilities are sums

of money owed to individuals or firms which will be settled in less than one year. Examples of current liabilities are accounts payable (creditors) and bank overdraft

• Non-current liabilities are sums of money owed to individuals or firms which will be settled in more than one year. Examples of non-current liabilities are mortgage loans and bank loans


The date at which it is being preparede.g. as at February 28, 2017

When preparing the balance sheet, show the following information in the heading:

The name of the organisatione.g. DB Enterprises

The name of the financial statemente.g. Balance Sheet

(ask you self these questions?)


• Presentation of the Balance Sheet – Style– Assets and Liabilities in a Balance Sheet can

be arranged in two styles. – The styles are order of permanence and order

of liquidity:• Order of permanence presentation in the balance

sheet, assets are placed first.• It reflects the length of time each asset is expected

to benefit.


• Non-current assets are placed first, starting with the asset that will last longer than one year

• Current assets are shown in the following order of permanency– Inventory– Receivables (Debtors)– Bank – Cash• In the other half of the balance sheet, the capital and liabilities

categories are shown in the following order permanency:• Capital• Non-current liabilities• Current liabilities


Classified Balance Sheetorder of permanence

EXAMPLE OF SIMPLE BALANCE SHEETSB. Enterprises $ $ $Balance Sheet as at 31 J uly 2018

Non-current AssetsLand & Building *Fixtures and Fittings *Equipment * **

Current AssetsInventory *Accounts receivable *Cash at bank *Cash in hand * ** ***

Capital **

Non-Current LiabilityMortgage *Bank Loan * **

Current LiabilityAccounts payables *Bank overdraft * ** ***

• Balance sheet style of presentation for order of liquidity:– shows the assets (that is current assets) which are already in cash

form first – and the assets which are more difficult to convert to cash in the near

future last.• The order of presentation starts with cash in hand and ends

with inventories or prepaid expenses.• For the other half of the balance sheet, current liabilities will

be shown before non-current liabilities and capital will be placed last.


Classified Balance Sheetorder of liquidity

EXAMPLE OF SIMPLE BALANCE SHEETSB. Enterprises $ $ $Balance Sheet as at 31 J uly 2018Current AssetsCash in hand *Cash at bank *Accounts receivables *Inventory * **

Non-current AssetsEquipment *Fixtures and Fittings *Land and Building * ** ***

Current LiabilityAccounts payables *Bank overdraft * **

Non-Current LiabilityBank Loan *Mortgage * **

Capital ** ***

When preparing a Balance Sheet• Show the following information on the

balance sheet– The name of the firm– The name of the financial statement– The date at which it is being

prepared• Use either the style of order or

presentation or order for liquidity (not both together)

• Total each part of the balance sheet


• Look at the link on the next slide and watch the video on creating a simple balance sheet

• Create a Simple Balance Sheet

Ptionline divisionhttps://www.youtube.com/watch?v=QYA0GiSQ524

Simple Balance Sheet

https://www.youtube.com/watch?v=QYA0GiSQ524

https://www.youtube.com/watch?v=QYA0GiSQ524

simple balance sheet

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