Fundamentals of Accountancy, Business and Management 2 for Grade 12 - Module 1 (Chapter 1/Week 1)

Summary

This web class by Teacher Jeans delves into the fundamentals of accountancy, focusing on the statement of financial position, also known as the balance sheet. It explains the components of assets, liabilities, and equity, and their classification into current and non-current items. The lesson guides students through preparing a balance sheet for a single proprietorship, emphasizing the importance of this financial statement in assessing a company's financial health and predicting future earnings.

Takeaways

• 📚 The video script is a lesson on the fundamentals of accountancy, focusing on the statement of financial position, also known as the balance sheet.
• 🔍 The balance sheet presents the financial position of an entity at a specific date and helps assess the financial health and trends of a business over time.
• 💼 It is crucial for identifying the entity's liquidity, financial, credit, and business risks, and for comparing with competitors' financial statements.
• 📈 The statement of financial position consists of assets, liabilities, and equity, reflecting what the business owns, owes, and the residual interest belonging to the owners.
• 🏦 Assets can be classified as current (to be realized within one year) or non-current (long-term assets held over one fiscal year).
• 💰 Current assets include cash, cash equivalents, accounts receivable, and inventories, while non-current assets include property, plant, equipment, intangible assets, and investment properties.
• 📋 Liabilities are obligations that can be current (to be settled within one year) or non-current (not expected to be liquidated within one year).
• 🏢 Examples of current liabilities include accounts payable, notes payable, and taxes payable, while non-current liabilities may include long-term loans and bonds payable.
• 📊 Equity for a sole proprietorship is referred to as owner's equity, reflecting the net effect of investments, withdrawals, net income or loss, and other adjustments.
• 📝 Preparing a statement of financial position involves presenting a heading with the entity's name, statement title, and reporting period, followed by assets, liabilities, and owner's equity.
• 📊 The statement can be presented in report form (vertical format) or account form (horizontal format), with a double rule to indicate the final figures.

Q & A

What is the purpose of the statement of financial position in business?

The statement of financial position, also known as the balance sheet, presents the financial position of an entity at a given date, helping users assess the financial health or soundness of the company or business, and identifying underlying trends in the financial position of the firm.

How does the statement of financial position help in assessing a company's risks?

The statement of financial position can help in determining the state of the entity's liquidity risk, financial risk, credit risk, and business risk, especially when used in conjunction with other financial statements of the entity or its competitors.

What are the three main components of the statement of financial position?

The three main components of the statement of financial position are assets, liabilities, and equity.

What is the accounting equation that represents the relationship between assets, liabilities, and equity?

The accounting equation is Assets = Liabilities + Equity, which shows that the total assets of a business must be equal to the sum of its liabilities and equity.

What is the difference between current and non-current assets?

Current assets are those expected to be realized within one year from the reporting date, while non-current assets are long-term assets that a company expects to hold over one fiscal year.

Why is cash considered a current asset?

Cash is considered a current asset because it can be readily converted within one year and can be used to pay short-term obligations, including bills and coins in hand, bank accounts, and operating funds.

What are some examples of current assets other than cash?

Examples of current assets other than cash include cash equivalents, accounts receivable, notes receivable, trading securities, and inventories.

How are property, plant, and equipment (PPE) presented in the statement of financial position?

PPE are presented in the statement of financial position after deducting the related accumulated depreciation, as they are depreciated over their estimated useful life, except for land, which is not depreciated.

What are the two main forms of presenting the statement of financial position?

The two main forms of presenting the statement of financial position are the report form, which lists assets first followed by liabilities and owner's equity, and the account form, which has assets on the left side and liabilities and owner's equity on the right side.

How is the owner's equity calculated in a sole proprietorship?

In a sole proprietorship, owner's equity is calculated as the net result of the owner's investments, withdrawals, net income or loss for the year, and other adjustments from the beginning balance of owner's equity.

Outlines

00:00

📚 Introduction to Financial Position Statement

This paragraph introduces the fundamentals of accountancy, business, and management, focusing on the statement of financial position, also known as the balance sheet. It outlines the objectives of the lesson, which include understanding and classifying the elements of the statement, preparing it for a single proprietorship, and using different forms. The statement of financial position is essential for assessing a company's financial health and identifying trends over time, which can indicate liquidity, financial, credit, and business risks. The paragraph also explains the basic accounting equation: assets = liabilities + equity, and describes the components of a financial position, including assets, liabilities, and equity.

05:00

💼 Classification of Assets in Financial Position

The second paragraph delves into the classification of assets as either current or non-current. Current assets are those expected to be realized within one year and include cash, cash equivalents, accounts receivable, notes receivable, trading securities, and inventories. Non-current assets, on the other hand, are long-term and include property, plant, and equipment (PPE), intangible assets, investment properties, and biological assets. The paragraph provides examples and explanations for each type of asset, highlighting their significance in a company's financial position.

10:02

🏢 Understanding Non-Current Assets and Liabilities

This section continues the discussion on non-current assets, providing examples such as biological assets and explaining the concept of liabilities. Liabilities are obligations that a business owes to others, arising from past events and expected to result in an outflow of resources. The paragraph differentiates between current and non-current liabilities, with current liabilities being those expected to be settled within 12 months of the balance sheet date. Examples of current liabilities include accounts payable, notes payable, interest payable, accrued expenses, and income tax payable. Non-current liabilities, which are not expected to be liquidated within the same timeframe, are also briefly mentioned.

15:02

💼 Equity Components and Balance Sheet Preparation

The fourth paragraph discusses the components of equity in a balance sheet, including retained earnings, revaluation reserves, and the distinction between different business structures such as sole proprietorships, partnerships, and corporations. It then outlines the steps for preparing a statement of financial position, emphasizing the importance of the heading, the presentation of assets, liabilities, and owner's equity. The paragraph also touches on the interconnectedness of this topic with business finance and organization and management.

20:04

📋 Steps for Preparing a Statement of Financial Position

This paragraph provides a detailed guide on how to prepare a statement of financial position, starting with the heading that includes the entity's name, the title of the statement, and the reporting period. It then explains how to present assets, distinguishing between current and non-current assets, and how to present liabilities, differentiating between current and non-current. The paragraph concludes with the addition of owner's equity to complete the equation of assets equals liabilities plus equity, ensuring that the total assets are equal to the sum of liabilities and owner's equity.

25:05

📊 Presentation Formats of the Statement of Financial Position

The final paragraph discusses the two common presentation formats for the statement of financial position: the report form and the account form. The report form presents assets first, followed by liabilities and owner's equity, in a vertical format. The account form, on the other hand, uses a horizontal format with assets on the left side and liabilities and owner's equity on the right side. The paragraph emphasizes the importance of double ruling to indicate the end of sections and the total of the statement. It concludes with a reminder to present the statement in the appropriate format and to ensure that the basic accounting equation is maintained.

Keywords

💡Statement of Financial Position

The 'Statement of Financial Position' is also known as the balance sheet, which is a fundamental financial statement that presents the financial position of an entity at a given date. It is crucial for assessing the financial health of a company. In the script, it is discussed as a tool to identify trends in a firm's financial position and to determine liquidity, financial, credit, and business risks.

💡Assets

Assets are resources owned or controlled by an entity to derive economic benefits. They are classified as either current or non-current in the balance sheet. The script explains that current assets are expected to be realized within one year, while non-current assets are long-term assets held over one fiscal year, and examples include cash, cash equivalents, and property, plant, and equipment (PPE).

💡Liabilities

Liabilities represent obligations or debts that a business owes to others, which may be settled through the transfer of cash or other resources. The script distinguishes between current liabilities, which are expected to be settled within one year of the balance sheet date, and non-current liabilities, which are long-term debts not expected to be liquidated within that timeframe.

💡Equity

Equity, in the context of the script, refers to the residual interest in the business that belongs to the owners. It is calculated by subtracting total liabilities from total assets. Equity is a key component of the accounting equation and represents the net worth of the business.

💡Current Assets

Current assets are short-term assets expected to be converted to cash or used up within one year from the reporting date. The script provides examples such as cash, cash equivalents, and accounts receivable, which are important for assessing a company's liquidity and short-term financial health.

💡Non-Current Assets

Non-current assets, as mentioned in the script, are long-term assets a company expects to hold over one fiscal year. Examples include property, plant, and equipment (PPE), and intangible assets like trademarks and patents. These assets are essential for the ongoing operations and long-term value creation of a business.

💡Current Liabilities

Current liabilities are obligations that a company expects to settle within 12 months of the balance sheet date. The script cites accounts payable, wages payable, and taxes payable as examples. Understanding current liabilities is vital for assessing a company's short-term financial obligations and liquidity.

💡Non-Current Liabilities

Non-current liabilities are long-term obligations that a company does not expect to settle within one year. The script provides examples such as long-term bank loans and bonds payable. These liabilities are significant for understanding a company's long-term financial commitments and debt structure.

💡Accounting Equation

The accounting equation, as described in the script, is a fundamental principle in accounting that states 'assets = liabilities + equity'. It represents the basic relationship between a company's assets, liabilities, and equity, and is used to prepare the statement of financial position.

💡Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. In the script, it is mentioned in the context of property, plant, and equipment (PPE), where the cost of these assets is spread out over the period of their use, reflecting the consumption of their economic benefits over time.

💡Owner's Equity

Owner's equity, as discussed in the script, pertains to the equity of a sole proprietorship, which includes the net effect of investments, withdrawals, net income or loss, and other adjustments to the beginning balance of equity. It reflects the owner's claim on the assets of the business.

Highlights

Introduction to the fundamentals of accountancy, business, and management, focusing on the statement of financial position.

The statement of financial position, also known as the balance sheet, presents an entity's financial position at a given date.

The balance sheet helps assess the financial health and soundness of a company and can identify underlying trends over several accounting periods.

Financial position components include assets, liabilities, and equity, with the accounting equation being assets = liabilities + equity.

Assets are classified as current or non-current based on their expected realization within one year from the reporting date.

Examples of current assets include cash, cash equivalents, accounts receivable, and trading securities.

Inventories are part of current assets and include goods for resale, work in progress, and materials and supplies for production.

Non-current assets include property, plant, and equipment (PPE), which are depreciated over their estimated useful life.

Intangible assets, such as trademarks and patents, are amortized over their useful lives or tested for impairment annually.

Investment properties and biological assets are classified as non-current assets based on their long-term use or appreciation.

Liabilities are obligations that a business owes to others, classified as current or non-current based on their expected settlement within one year.

Current liabilities include accounts payable, notes payable, interest payable, and income tax payable.

Non-current liabilities are long-term obligations such as long-term bank loans, bonds payable, and mortgage payable.

Equity categories differ for sole proprietorships, partnerships, and corporations, reflecting the ownership's interest in the entity.

The preparation of a statement of financial position involves presenting assets, liabilities, and owner's equity in a report or account form.

The report form of the statement of financial position lists assets first, followed by liabilities and owner's equity in a vertical format.

The account form presents assets and liabilities in two columns, reflecting the accounting equation in a horizontal format.

The statement of financial position must balance, with the total assets equaling the sum of liabilities and owner's equity.

Transcripts

hi good day this is your web teacher

teacher jeans welcome to our class of

fundamentals of accountancy business and

management too we will discuss our first

topic for this week statement of

financial position

the end of this lesson you are expected

to be able to describe the elements of

the statement of financial position

to classify the elements of statement of

financial position into current and

non-current items to prepare the

statement of financial position of a

single proprietorship and to prepare a

statement of financial position using

the report form and the account form

with proper classification of items as

current or non-current so this topic has

been discussed in your 5 m1 subjects but

this time

we will discuss this

in a more detailed way so statement of

financial position

is also known as balance sheet and it

presents the financial position of an

entity at a given date so

this date

means

that this statement should

be stated as at or as of the end of the

period

so this

balance sheet

um helps users of financial statements

to

assess the financial health or

soundness of the company or the business

so

when analyzed over several accounting

periods

these balance sheets may assist in

identifying underlying trends in the

financial position of the firm

and this is very helpful now

particularly in determining the

state of the entity's liquidity risk the

financial risk its credit risk and of

course its

business risk so

when used in conjunction with other

financial statements of the entity in

the

financial statement of its competitors

balance sheet may help to identify

relationships and trends which

are

indicative of potential problems or

areas for further improvement

and another one is the analysis of this

statement could

therefore assist the users of financial

statements to predict the amount

timing

and volatility of entities future

earnings

meant a financial position consists of

the following components or elements we

have assets liabilities and

equity so

the assets of an entity may be financed

from internal sources like share capital

and profit

so and also from external credit like

um trade creditors bank loans so since

the total assets of a business must be

equal to liabilities and equity

so this leads to the accounting equation

assets equals liabilities plus equity so

assets

are

something that an entity owns or

controls in order to derive economic

benefits from its use and liabilities

so these are obligations that a business

owes to someone

and

its settlement involves cash now the

transfer of cash or other resources and

the last one we have equity so this is

what the business owes to its owners so

it's derived from deducting

the total liabilities from the total

asset so

it therefore represents the residual

interest in the business that belongs to

the

owners

so here the

basic account equation we have assets

plus liabilities equals equity so

this is very important

so here again

something that an entity owns or

controls in order to derive economic

benefits from its use so

it can be classified as current or

non-current assets

so assets must be classified in the

balance sheet or in the statement of

financial position as current

or

non-current assets so

um current assets

these are

assets that are expected to realize not

to be realized within one year from the

reporting date

and

this non-current assets are long-term

assets that a company expects to hold

over one fiscal year so

if it is six months or less than a year

or within a year

so that can be considered as current

assets and it is more than one year

that is labeled as non-current assets

so cash examples of current assets

number one example of this is cash so

cash is considered a

current asset because it can be readily

converted within one year

and can be used to pay short term

obligations and

cash includes bills and coins in hand

bank accounts and operating funds

for example

bills and coins inside a restaurant's

cash register or included the company's

cash account

also

cash deposited in banks under the

company's name are also classified as

cash

unless they are restricted

so finally

operating and working funds

here are also classifieds as

cash

another example

is cash equivalent so this is short term

highly liquid investments that are

readily convertible to known amounts of

cash and which are subject to an

insignificant risk of changes in value

so

this has been defined now by the ias 7

the statement of cash flows iasp

and also this term short term the term

short term here

so this is subject to the entities

policy and ordinarily the instruments

that acquired 90 days before the year

before the

maturity

are classified as cash equivalent so

to

sum up the bills and coins on hand plus

bank accounts plus operating funds

are considered as cash

and this one cash equivalents are those

instruments that acquired 90 days before

their maturity

so another we have

accounts receivables so these are

amounts owed

by the customers to the

entities ordinarily

entities sell on credits over cash

so the entity records at trade accounts

receivables or accounts receivables

while waiting for the collection of cash

on due date so this

receivables are called open accounts

since they do not have documentary

support other than the sales contract

and another one we have notes receivable

so

this are evidenced by a promo sorry note

so

there are three key

elements of notes receivable so remember

this

first

is a principal amount of the amount

collectible by the entity from the

customer

second notes receivable would have

maturity dates which can be for 30 60 or

90 days upon the date of ishe

and lastly it must have a corresponding

interest like six percent or

seven percent

and interest receivables so

um these are collectible amounts due to

the cost of

borrowing money so these are related to

the notes receivable no from the

previous example

and this in the interest of this is

computed as principal

multiplied by interest rate and

multiplied by the related time factor

and

another one we have trading securities

so

this securities that have been purchased

by a company

for the purposes of realizing a

short-term profit

another term for this is

what we call the faf

vpl or the financial assets at fair

value true

through profit of loss so this means

that the entity must carry these

instruments

with short-term profit-taking motives

like

changes in

market price

and of course inventories so these are

merchandise held for resale so the

international accounting accounting

standard board

so it includes the following

items as part of inventories first you

have the

um

goods for resale in the normal course of

business so

they are conventionally called finished

goods so these are part of inventories

so for example

a real estate company selling land will

classify their land as inventories as

such are held for resale

or held for sale in the normal courts of

business so

on the other hand assume that a

manufacturing entity owns a piece of

land where its manufacturing plant

stands so

this land will not be classified as

inventory since such is not held for

sale so

those

um considered only for held for resale

and second

inventories include goods in the process

of production

so these are conventionally called as

work in progress or goods in princess

and lastly

inventories include materials and

supplies to be consumed in the

production process so

this are conventionally called

raw materials for example a beverage

company producing bottled orange juice

will include

fresh oranges and concentrates a cereal

material so it could be part of the

inventories

and supplies and other prepaid assets so

these include office supplies to be

consumed by the business and prepaid

assets so

a common example of prepaid assets is

prepaid rent

so

that one

so first example for the non-current

assets we have property

plant

and

equipment so

this assets

include fixed assets that are used in

the normal operating cycle or

production of the business and

these assets also include

land and buildings being used by the

company the manufacturing plants

manufacturing equipment

vehicles

furnitures and fixtures and result

improvements are also included in this

category so

as long-lived assets

property plant and equipment or ppe are

depreciated over their estimated useful

life so however

land is not depreciated since

um

it is deemed with perpetual benefit and

ppe this property plan and equipment

are presented in the statement of

financial position after deducting the

related accumulated depreciation

next we have

intangible assets so

these are assets

meeting definition of asset but without

physical substance

so common intangible assets include

trademarks

so we have trademarks for brand names

patents for inventions

and copyrights for artistic or literary

work so intangible assets with

definite useful lives are amortized over

their

useful lives and

those with indefinite

useful lives however are annually tested

for

impairment so for ppe you have

depreciation

for intangible assets you have

what

you have

amortization so next

so another one we have investment

properties so these are long-lived

assets

not

remember this one not used in

production so the company's intention

for these assets

is to lease out or for long-term capital

appreciation so for example

um we have this lopez company that

purchases a land

and erects a building in the said land

for its corporate headquarters so such

is classified as property plant and

equipment

because the property is to be used by

the entity

but if that lopez company purchases the

same property and erects a building to

be listed out

to renters

then it is called

an investment properties why

because this property will be used to

generate rental income

and not for company use

next we have another example for

non-current assets

it's a

biological asset so

these are living plants or animals held

by the business for resale

or for

breeding so these assets include

trees in plantations plants dairy cattle

pigs

bushes figs and fruit trees

so the next component we have

liability so these are obligations that

a business owes

to

someone so this um

this is a present obligation arising

from past events

so the settlement of which is expected

to result in an outflow from the entity

of resources embodying economic benefits

or from the assets so

again these are present obligations

arising from from past events and

can be classified as current or

non-current liabilities so if we have

current assets and then current assets

we also have current liabilities and

non-current liabilities

so current liabilities are those

that the company expects to settle

within 12 months of the date on the

balance sheet so

um the settlement comes either from the

use of current assets such as cash on

hand or from the current sale of

inventory

settlement can also

come from swapping out one current

liability for another so at present so

most liabilities show up on the balance

sheet at historic cost rather than

fair value so there is no generally

accepted accounting principle or what we

call gap requirement for the order in

which they show up on the balance sheet

as long as

they are properly classified as current

so example of current liabilities we

have accounts by a ball nodes by a ball

and earned income

wages payable and taxes payable so the

next one we have none current

liabilities so

of these are um the ones the company

recons and are not going anywhere soon

so

in other words the company doesn't

expect to liquidate them within

12 months of the balance sheet dates

examples are long-term bank loan

bans payable and

mortgage payable

so again

some examples of current liabilities we

have accounts payable so or trade

accounts payable so these are open

accounts

relating to purchase of goods

or

raw materials so if the seller has

accounts receivable for uncollected

accounts then the buyer will have

accounts payables for

unpaid amounts next one we have notes

payable so unlike trade accounts payable

notes payable are evidenced by a

promissory note so if a seller receives

a note receivable

then the buyer then issues a note

payable so

as in the notes receivable

notes payable would have a principal

amount maturity date and

interest rate another example we have

interest payable so interest payable are

related to the notes payable

so interests are considered as cost for

borrowing money so interest are computed

as principal amount multiplied by time

factor and

interest rate so

another one we have other accrued

expenses so what are this this accounts

pertain to expenses incurred

but not yet paid so common examples of

these accurate expenses are salaries

rent and utilities

we have here our last example for

current liabilities there are more but

we will have a limited examples for this

lesson so income tax payable

so

business organizations tax liability to

the government where it

operates so

um income taxes are normally paid on the

5th of april of the succeeding year so

you can also check my other video for

this

for the introduction for fab m2

so before we proceed to this one so

again another exam um we also have done

current liabilities so i forgot to put

it in the slide but

um

as i have mentioned the examples for

this are the long-term bank loan loans

unpayable bonds payable mortgage payable

so this topic notes a statement of

financial position

is also interconnected with your

business finance your accounting one

subject

and for the

your interrupt even in in your interest

in your organization and management so

this one

for categories of equity in the last

portion of your balance sheet

so for sole proprietorship you use

owner's equity and that is net off

withdrawal and for partnership you use

partners equity

net of partners withdrawal and share in

net income or

net loss and for corporation you use

stockholders equity so actually for

corporation you have their share capital

that represents the amount invested by

the owners in the entity you also have

retained earnings that comprises the not

total net profit or loss retained in the

business after distribution to the

owners in the form of

dividends and of course you also have

revaluation reserve

contains the net surplus of any upward

revaluation of property plant and

equipment that is recognized directly in

equity

so let's move to the

preparation in

preparing a simple

statement of financial position or

balance sheet so first you have to start

with the heading

second you have to present the

assets third one you have to present the

liabilities in the last one you have to

add the owner's equity again owner's

equity if sole proprietorship since

we will only

um be discussing the single

proprietorship

statement of financial position so we

will use

owner's equity

so step one start with the heading

so

um the heading includes sorry for this

the heading includes the name of entity

individual or company

name of the statement

so we have statement financial position

and the reporting period so for example

we have december 31

20 21 so some complex forms of business

may include a more detailed heading

like when

reporting a consolidated balance sheet

and or

when presenting comparative years so

the next slide is an example of a simple

heading in the balance sheet

that is stated in the local currency

so this is the example of

a simple heading

so you have there the name of the

individual

um

the title statement financial position

and of course the date

step two you have to present the assets

so classify the assets into

current and non-current assets so again

current assets are cash cash equivalents

assets held for collection sale or

consumption within the entity's normal

operating cycle

and assets

could also

assets that are held for trading within

the next 12 months so the rest are

considered

non-current assets

so example

again you're heading the name of the

entity or the individual the title

the date then you have to present the

asset portion so current

and non-current assets

so here and you have to you have the

total assets current plus none current

so

again as i have mentioned

um non-current assets the ppe

what will you show in the balance sheet

is

the net

the net of the depreciated amount

so delivery equipment for 50 000 less

accumulated depreciation because it

depreciates

so the third step you have to present

the liabilities so after presenting the

total assets next are the liabilities so

you should also

know the liabilities as the current or

non-current

so after presenting the assets current

assets and then current assets and also

the liabilities we have current

liabilities and then current liabilities

and you have their total liabilities

so the statement of financial position

looks like this

and the last step you have to add the

owner's equity so the statement of

financial position is an equation of

assets equals liabilities plus equity so

there is need to add the owner's equity

the liabilities and equity section of

the statement of the financial position

so here this is the example i hope you

can see it clearly

so here assets

so first step you have the title the

heading

the assets the liabilities and the

owner's equity

so

there is a need to again to add this

owner's equity in this liability and

equity section this is

this one

this one is the liability and

owner's equity section

so the owner's equity presented may only

show the ending balance

so this one

so

that is the ending balance amount shown

in the statement of changes in owner's

equity so

this amount

is already the result of the adjusting

after adjusting the investments um

withdrawals the net income or loss for

the year

and other adjustments from the beginning

balance of owner's equity so after

presenting the owner's equity

the statement of financial position will

look like this so remember

the equation the basic account equation

assets equals liabilities plus owner's

equity so this one must be equal

so this is the total assets 777

800

and

you add up the cur the total liabilities

567 plus

um

owner's equity 210 so it will result to

777 800 same with the total asset so

this one must be equal to the sum of the

total liabilities and owner's equity so

for your presentation of your statement

of financial position if that's your

final answer do not forget to

double rule

so this one

you have to put a

double rule

at one

okay

so

so

in the statement financial position you

may present it in a

report form or in an account form so the

report form it shows assets accounts

first and then liabilities and owner's

equity accounts after so it provides

information in a vertical format

vertical format one column

that goes

so here

it should be in the vertical format one

column that goes the full width of the

page so you have here the

assets the liabilities and owner's

equity so that is a report for

starts with assets providing a total

value of at the end of the asset section

you also have liabilities

then equity so the final line of the

report providing the total combined

value of liabilities and equity

so the one we have we had

presented

so it was a

report

form it started with assets liabilities

and owner's equity so again do not

forget

to have a

double rule

so for account form

so it has two columns

two columns

so that shows assets

on the left side here

and the liabilities and owner's equity

on the right side so just like the debit

and credit balances of an account so if

you observe account form so that is

based on the accounting equation assets

assets equals liabilities plus owner's

equity so this one you start with the

assets on the left side then the

liabilities and honors equity on the

right side so it provides information in

an essentially

horizontal

format so the left column again list of

companies assets

and the final line on the left side of

the sheet provides the total value of

the assets

and the column on the right list of both

liabilities and equity so

um the final line on the right side of

the total combined assets

um that is the total amount of

liabilities and equity so for ex example

of this is shown in the next line this

is the example of a

account form so

it's in

the

horizontal format

so this left side composer assets the

right side are your liabilities and

equity

thank you so much see you in our next

web class