TABLE OF CONTENTS In this chapter we will be looking at the balance sheet: what it is and what is its purpose; what it does and does not show. We will be using a profit-making public limited company as the basis for our discussion. However, the same basic principles apply to the preparation of balance sheets for all types of organisation, ranging from the smallest not-for-profit tennis club to the largest public limited company. Throughout this chapter we will be using the following illustration of a typical company's balance sheet:
Example plc: Balance sheet as at 31 year 2007
| ?000 | ?000 | |
|---|---|---|
| Non-current (fixed) assets | ||
| Intangible assets | 250 | |
| Tangible assets: property, plant and equipment | 2, 400 | |
| Investments | 2685 | |
| Current assets | ||
| Inventories (stocks) | 328 | |
| Trade receivables (debtors) | 502 | |
| Other current assets | 31 | |
| Cash and cash equivalents | 120 | |
| 981 | ||
| Current liabilities | ||
| Trade and other payables (creditors) | 550 | |
| Short-term borrowings | 50 | |
| 600 | ||
| Working Capital | 381 | |
| Total assets less current liabilities | 3, 066 | |
| Share capital | 2, 200 | |
| Reserves retained profits | 350 | |
| Other Reserves | 230 | |
| Shareholders' equity | 381 | |
| Working Capital | 2780 | |
| Non-current liabilities | 286 | |
| Capital employed | 3, 066 |
A balance sheet is a statement which shows the things of value that an organisation owns (the assets), as well as the sources...
