The Balance Sheet

Abstract

When you have finished working through this chapter you should be able to

• Give a brief explanation of the balance sheet

• Define the term asset

• Distinguish between a fixed asset and a current asset and give examples of both

• Define and contrast the terms debtor and creditor

• Define the term liability

• Explain the difference between a LONG-TERM LIABILITY and a current liability, giving examples of both

• Explain what is meant by the capital of a business, and appreciate the difference between cash and capital

• Understand why the two parts of the balance sheet must always balance

• Draw up a balance sheet in the context of a simple exercise

• Calculate and explain the impact of simple business transactions on a balance sheet

• Explain what is meant by DUALITY