The Balance Sheet

Financial statements are the final product of the accounting process. They provide information on the financial condition of a company. The balance sheet, one type of financial statement, provides a summary of what a company owns and what it owes on one particular day.

Assets represent everything of value that is owned by a business, such as property, equipment, and accounts receivable. On the other hand, liabilities are the debts that a company owes-for example, to suppliers and banks. If liabilities are subtracted from assets (assets-liabilities), the ammount remaining is the owners’ share of a business. This is known as owners’ or stockholders’ equity.

One key to understanding the accounting transactions of a business is to understand the relationship of its assets, liabilities, and owners’ equity. This is often represented by the fundamental accounting equation : assets equal liabilities plus owners’ equity.

Assets = Liabilities + Owners’ Equity

These three factors are expressed in monetary terms and therefore are limited to items that can be given a monetary value. The accounting equation always remains in balance; in other words, one side must equal the other.

The balance sheet expands the accounting equation by providing more information about the assets, liabilities, and owners’ equity of a company at a specific time (for example, on December 31, 1993). It is made up of two parts. The first part lists the company assets, and the second part detais liabilities and owners’ equity. Assets are divided into current and fixed assets. Property, buildings, and equipment make up the fixed assets of a company. The liabilities section of the balance sheet is often divided into current liabilities (such as accounts payable and income taxes payable) and long term liabilities (such as bonds and long-term notes).

The balance sheet provides a financial picture of a company on a particular date, and for this reason it is useful in two important areas. Internally, the balance sheet provides managers with financial information for company decision-making. Externally, it gives potential investor data for evaluating the company financial position.

NERACA

Laporan keuangan merupakan hasil akhir dari proses akunting. Laporan keuangan memuat data keuangan suatu perusahaan. Neraca, jenis laporan keuangan yang berisi ringkasan tentang kekayaan dan hutang perusahaan pada suatu hari.

Aset adalah semua milik perusahaan yang bernilai, seperti tanah, perabotan & tagihan piutang. Sebaliknya, hutang adalah kewajiban yang harus dibayar – umpama kepada supplier atau bank. Jika hutang dikurangkan pada aset (aset- hutang) sisanya adalah kekayaan pemilik perusahaan. Ini dinamakan kekayaan pemilik perusahaan atau pemegang saham.

Kunci untuk mengerti transaksi akunting bisnis harus mengerti hubungan aset, hutang dan kekayaan pemilik. Ini sering dinyatakan dengan persamaan dasar akunting aset sama dengan hutang ditambah kekayaan pemilik.

Aset = Hutang – Kekayaan Pemilik.

Tiga unsur ini dinyatakan dalam nilai uang dan oleh sebab itu terbatas untuk barang-barang yang tidak dapat dinilai dengan uang. Persamaan akunting selalu tetap sama, dengan kata lain, sisi yang satu harus sama dengan sisi yang lain.

Neraca memperluas persamaan akunting dengan memberikan lebih banyak data tentang aset, hutang dan kekayaan pemilik perusahaan pada saat tertentu (Umpama pada tanggal 31 desember 1993). Neraca terdiri dari dua bagian. Bagian pertama berisi aset perusahaan dan bagian ketua hutang dan kekayaan perusahaan. Aset terdiri dari Aset lancar dan aset tetap. Uang tunai, tagihan hutang, perabotan, dan barang dagang semuanya adalah aset lancar. Tanah, gedung dan peralatan merupakan aset tetap perusahaan. Hutang pada neraca terdiri dari hutang yang harus segera dibayar (Seperti tagihan hutang dan pajak penghasilan) dan hutang jangka panjang (Umpama bond dan hutang jangka panang lainnya).

Neraca berisi gambaran perusahaan pada suatu waktu. Dan oleh karena itu berguna untuk dua sisi yang penting. Kedalam, neraca memberikan data keuangan kepada manajer untuk membuat keputusan perusahaan. Keluar, neraca menyediakan data kepada calon investor untuk mengevaluasi keadaan keuangan perusahaan.

Comprehension

A. Answer the following questions about the balance sheet. Questions with asterisk (*) cannot be answered directly from the text.

1. What is the final product of the accounting process?

The final product of the accounting process is the balance sheet.

2. What is a balance sheet?

A balance sheet is a final product that provides a summary of what a company own’s

and what it owes on one particular day.

3. Does the balance sheet provide financial information for a long period of time or does it provides information for a specific point in time?

It provides information for a specific point in time for example, on Jan 30,1993.

4. What is the difference between assets and liabilities?

Assets represent of value that is owned by a business, liabilities are the debts that is a

company owes.

5. How is owner’s or stockholders’ equity determined?

Owners’ or stockholders’ equity is determined by subtracting liabilities from assets.

6. How can the relationship between asset, liabilities and owners’ equity be represented?

It can be represented by the fundamental accounting equation : assets equal liabilities

plus owners’ equity.

7. Does the accounting equation lways remain in balance? +why or why not?

Yes, it does. Because one side must equal the other. If not, it must be wrong with the

recording.

8. How can the business use a balance sheet? *as a manager, how would you find a

balance sheet useful?

A balance is useful for a business, because it provides a financial picture of a company

on a particular day. It provides manager with financial information for company

decision-making.

B. Complete the balance sheet by writing in the correct terms from the list below.

Assets Current liabilities Long-term liabilities

Liabilities Fixed assets Current assets Stockholders’ equity
International Manufacturing, Inc.Balance Sheet