THE BALANCE SHEET 1

The Balance Sheet 1

Are the following statements true or false? Find reasons for answers in A and B opposite.

British and American balance sheers show the same information, but arranged differently.  (TRUE)

• • American and continental European companies usually put assets on the left and capital and liabilities on the right. In Britain, this was traditionally the other way round, but now most British companies use a vertical format, with assets at the top, and liabilities and capital below.

The revenue of the company in the past year is shown on the balance sheet.  (FALSE) 

      A balance sheet does not show how much money a company has spent or received during a year. This information is given in other financial statements: the profit and loss account and the cash flow statement.

The two sides or halves of a balance sheet always have the same total  (TRUE)

       The balance sheet is a document which has two halves. The totals of both halves are always the same, so they balance. 

The balance sheet gives information on how much money the company has received from sales of shares (TRUE)

   

        Shareholders' equity consists of all the money belonging to shareholders. Part of this is share capital - the money the company raised by selling its shares.

The assets total is always the same as the liabilities total (FALSE)

Since assets are shown as debits (as the cash or capital account was debited to purchase them), and the total must correspond with the total sum of the credits - that is the liabilities and capital - assets equal liabilities plus capital.

The balance sheet tells you love much money the company owes (FALSE)

Liabilities are obligations to pay other organizations or people: money that the company owes, or will owe an a future date. These often include loans taxes that will soon have to be paid, future pension payments to employees, and bills from suppliers: companies which provide raw materials or parts.

Complete the sentences. Look at A and B opposite to help you.

Providers are companies that provide other companies with materials, components, etc.

Retained earnings are profits that the company has not distributed to shareholders.

Assets are things a company owns and uses in its business.

The liabilities consist of everything a company owes.

Shareholders' equity consist of money belonging to a company's owners.

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DIANA MARCELA SERNA RINCON

JUAN CAMILO HINCAPIE GONZALEZ

YINA PAOLA FRANCO CALDERON

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