17.5.3. Format of Balance Sheet

Try these first

1. 1.

   What are the three main components of a Balance Sheet?

   Hint

   Think about what a business owns and owes.

2. 2.

   What principle states that Assets must equal Liabilities plus Owner's Equity?

   Hint

   Remember the acronym ALOE!

3. 3.

   What is the primary purpose of a Balance Sheet?

   • To show profits
   • To summarize financial position
   • To display cash flows

   Hint

   Think about what a Balance Sheet summarizes.

4. 4.

   True or False: Liabilities are always greater than assets in a well-run business.

   • True
   • False

   Hint

   Consider what represents a financially healthy company.

5. 5.

   A company reports ₹1,500,000 in assets, ₹800,000 in liabilities, and you find they paid off a ₹200,000 long-term loan. What will be the new owner's equity?

   Hint

   Make sure to recalculate liabilities after the loan payment.

6. 6.

   If a company's original assets increased by 20% but liabilities increased by 10%, how would you express the change in owner's equity?

   Hint

   Think about growth rates and how they impact both sides of the equation.