17.5. Balance Sheet

Try these first

1. 1.

   What are the three main components of a Balance Sheet?

   Hint

   Think about what the business owns and owes.

2. 2.

   Define Owner's Equity.

   Hint

   It's what's left for the owner after paying off what the business owes.

3. 3.

   What does a Balance Sheet represent?

   • A list of all expenses
   • The financial position of a business at a specific time
   • The income of a business for a period

   Hint

   Remember what it shows about the business.

4. 4.

   True or False: Owner's equity increases when a business incurs a loss.

   • True
   • False

   Hint

   Think about how profits affect owner's equity.

5. 5.

   If a company has total assets of $1,250,000 and total liabilities of$750,000, what is the owner's equity? Further, explain how this owner's equity could change if the company takes a new loan.

   Hint

   Remember the accounting equation and how changes affect it.

6. 6.

   Create a hypothetical Balance Sheet for a small business with the following information: Assets ($200,000), Liabilities ($120,000), and explain how changing the values of Assets or Liabilities will impact Owner’s Equity.

   Hint

   Refer back to the accounting equation for your explanations.