Report Form Balance Sheet

Report Form Balance Sheet

• It is important to realize that since we have an expanded equity section, we must now change the format of our balance sheet
• Revenue, expenses, and drawings have a direct affect on capital, so they must be included in the balance sheet
• Revenue and expenses are illustrated on the balance sheet by the Net Income or Net Loss figure
• Drawings is illustrated on the balance sheet by the drawings figure
• Just like the fundamental accounting equation (A = L + OE), there is a equity equation for every business
• Beginning Capital  +  Net Income/Loss  - Drawings   =   Ending Capital
• This equity equation appears, just as illustrated, in the Owner’s Equity Section of the Balance Sheet

New Features

• Balance Sheet is now 3 columns
• All accounts are listed on the same side of the page
• Assets, and their totals appear in the 3rd column
• Liabilities, and their totals appear in the 3rd column

The Equity Section

Owner's Equity
Kevin, Capital
Balance January 1		$Figure
Net Income	$Figure
Drawings	Figure
Increase in Capital		Figure
Balance January 31			Figure