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Financial Position pt.2

Financial Position pt.2. Causes of changes in the Balance Sheet. Net Change in Capital. * Assuming: (a) inventories sold for £5,000 and (b) owners draw (take out) £1,500 from the business, thereby reducing cash.

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Financial Position pt.2

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  1. Financial Position pt.2

  2. Causes of changes in the Balance Sheet

  3. Net Change in Capital * Assuming: (a) inventories sold for £5,000 and (b) owners draw (take out) £1,500 from the business, thereby reducing cash. Like all balance sheet items, the capital accounts are cumulative, and build up over time. The amount of past profit kept in the business (“plowed back”) is commonly known as retained earnings.

  4. Classification of assets: Current Assets

  5. Classification of assets: Non-current (fixed) Assets Any assets that do not meet the definition of current assets are classified as non-current assets.

  6. Classification of claims: Liabilities * Note that non-current (“long-term”) liabilities often become current liabilities; for example, when time has passed, and a two-year bank loan is now due within six months.

  7. Balance Sheet layout (UK): horizontal

  8. Balance sheet Layout (UK): Vertical

  9. Actual Balance Sheet (Thailand): Robinsons 2010 (p.1 of 3)

  10. Actual Balance Sheet (Thailand): Robinsons 2010 (p.2 of 3)

  11. Actual Balance Sheet (Thailand): Robinsons 2010 (p.3 of 3)

  12. When are balance sheets prepared?

  13. Balance Sheet Conventions

  14. Balance Sheet Conventions (cont.)

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