Transcript Financial Statements for a Proprietorship

FINANCIAL STATEMENTS
FOR A PROPRIETORSHIP
Chapter 7, Section 2
REVIEW ACCOUNTING CONCEPTS

CONCEPT: Adequate Disclosure


CONCEPT: Accounting Period Cycle


Financial statements contain all information
necessary to understand a business’s financial
condition.
Financial statements are always prepared at the end
of the fiscal period.
CONCEPT: Matching Expenses with Revenue

The revenue earned and the expenses incurred to earn
that revenue are reported in the same fiscal period.
BALANCE SHEET
Shows financial condition on a specific date
 Includes assets, liabilities, owner’s equity
 Data obtained from Balance Sheet columns of the
worksheet

PREPARING A BALANCE SHEET

Heading
1
2
3
1. Name of Company
2. Name of Report
3. Date of Report – just write the date not “For period ended…”
PREPARING A BALANCE SHEET (CONT.)

Sections include:
Assets
 Liabilities
 Owner’s Equity


Section headings are written in the center

Account titles are written at the left
PREPARING A BALANCE SHEET (CONT.)
Liability amounts
Account titles
1
Assets
Liabilities
4
8
Total Liabilities
Single line
2
Account titles
3
5
Asset amounts
7
Total of liabilities
9
6
PREPARING A BALANCE SHEET (CONT.)


Owner, Capital is the only account recorded in
the owner’s equity section of the balance sheet.
Must do a calculation to obtain this amount
Beginning Capital Account Balance (from worksheet)
+ Net Income (– Net Loss)
– Drawing Account Balance (from worksheet)
= Current (Ending) Capital Account Balance
PREPARING A BALANCE SHEET (CONT.)
1
Owner’s Equity
2
Account title
Total of assets
5
4
Single line
Capital amount
3
6
Total Assets
Compare totals
7
9
Total Liab. and
Owner’s Eq.
10
Double lines
Total of Liabilities and Owner’s Equity
8