The content is just an excerpt from the complete note for SS1 Third Term Financial Accounting Lesson Note – Balance Sheet. Check below to download the complete DOCUMENT
WEEK 4
TOPIC: Balance Sheet
CONTENT: Definition and Meaning of Balance sheet
(a) Assets and Liabilities
- Distinction
- Identification of types
- Classification
Sub – topic 1. Definition and Meaning of Balance sheet.
The term “balance sheet” can be defined as the statement that shows the presentation of summary of assets, liabilities and capital of a business in a well-arranged form; so that the financial position may be clearly ascertained. Balance sheet is not an account but a mere statement showing the balances remaining in the capital, assets and liabilities ledgers.
- Assets and Liabilities
Assets are:
1. something valuable that an entity owns, benefits from, or has use of, in generating income.
Something that an entity has acquired or purchased, and that has money value (its cost, book value, market value, or residual value). An asset can be (1) something physical, such as cash, machinery, inventory, land and building, (2) an enforceable claim against others, such as accounts receivable, (3) right, such as copyright, patent, trademark, or (4) an assumption, such as goodwill.
Assets shown on their owner’s balance sheet are usually classified according to the ease with which they can be converted into cash.
Liabilities are obligations that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed.
EVALUATION:
Classify each of the following into assets and liabilities:
- A salary advance to a staff
- A motor vehicle
- Capital
To gain full access to the note: DOWNLOAD FILE
