Project 2

1. Project 2

1.6. Training Room 2

Project 2: Financial Statements

Training Room 2: The Balance Sheet

Suggested Time: 80 minutes

Training Room Introduction

This picture shows a cartoon image of a young woman.

Balance sheet of a financial report with spectacles.

This training room will concentrate on using the worksheet to prepare a balance sheet at the end of the fiscal period.

The balance sheet for October 31, 20xx, may be quite different from the one prepared for November 30, 20xx. Can you think why this might be?

Check your answer.

Some reasons a balance sheet changes from day to day:

Money was received.
Money was paid.
Assets were bought.
Assets were sold.
Liabilities were paid.
Liabilities were increased.
Owner invested money in the business.
Owner withdrew money from the business.

A formal balance sheet is prepared and written in a standard format. The balance sheet for a large business may have different accounts than the balance sheet for a small business, but the content will be similar: assets, liabilities, and owner’s equity.

How often are balance sheets prepared? Most businesses prepare statements monthly, quarterly, or semi-annually (every six months), even though they are only required by law to prepare them once a year.