# The Balancesheet

De Balans
The Balance sheet
The financial administration of an enterprise
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Slide 1: Slide
EconomieMiddelbare schoolhavo, vwoLeerjaar 3

This lesson contains 39 slides, with text slides.

Lesson duration is: 45 min

## Items in this lesson

De Balans
The Balance sheet
The financial administration of an enterprise

#### Slide 1 -Slide

De Balans
Imagine:
A student from Havo 3 wants to start a candy store. To do this, they naturally need money to buy candy. The student has been saving for this over the past few months.
Let's say this student has saved €100, and they are going to invest their entire savings in candy.

What is the value of their candy?

#### Slide 2 -Slide

De Balans
Imagine:
A student from Havo 3 wants to start a candy store. To do this, they naturally need money to buy candy. The student has been saving for this over the past few months.
Candy value = €100
Savings value = €100
Candy = Savings

De Balans

#### Slide 4 -Slide

De Balans
The candy is balanced with €100.

#### Slide 5 -Slide

De Balans
For businesses, it is very important to know where the money comes from & where the money is going.
This needs to be well documented (written down). This is done in a balance sheet.

#### Slide 6 -Slide

De Balans
Debet
Credit
This is what a balance sheet looks like in a company's administration.

#### Slide 7 -Slide

De Balans
Debet
Credit
Firstly, the format of the balance sheet: What do we see?
Date
Debit
Credit
On this side, it indicates where the money comes from that the company will use. Therefore, ask the question: How do we acquire the money?
On this side of the balance sheet, it shows where the money has gone. These are also referred to as the assets of the company. Ask the question: On what has the money been spent?
A balance sheet is a snapshot. At any moment of the day, you can see how the money is obtained and where it is being spent.

#### Slide 8 -Slide

De Balans
Debet
Credit
Back to our example:

A student had €100 in savings and spent it entirely on candy.

How do we reflect this in the balance sheet?

#### Slide 9 -Slide

De Balans
Debet
Credit
Owner's equity €100
Stock of candy €100
-------- +
€100
-------- +
€100
At the bottom line, you now have €100 on both sides. This allows you to verify that your balance is correct. We can now say: The balance sheet is in balance!

#### Slide 10 -Slide

De Balans
Debet
Credit
Stock of candy €100
Owner's equity €100
-------- +
€100
-------- +
€100
Continuation of the scenario:
The student overlooked how much candy they ordered. Their idea: Purchase a shelf to store the candy. However, they have no money left, what now?

Grandma comes to the rescue, as she also loves sweets, and lends her grandson €200. The shelf itself costs the student €100. From the remaining money, he deposits €50 in the bank and keeps €50 as change in his cash register.

#### Slide 11 -Slide

De Balans
Debet
Credit
Owner's equity €100
Loan grandmother    €200
fixtures and fittings (shelf)                     €100
stock of candy     €100
Bank                       €50
Cash                        €50
-------- +
€300
-------- +
€300
Attention!
Balancesheet is in balance.

#### Slide 12 -Slide

De Balans
lesson 2 Position on the balance sheet + statement of changes
lesson 3 Statement of changes + debitor & creditor
lesson 4 profit and loss account + VAT

#### Slide 13 -Slide

De Balans
les 2 plek op de balans + mutatiebalans

lesson 2 Position on the balance sheet + statement of changes

#### Slide 14 -Slide

De Balans
Position on the balance sheet
Debit
Credit
Fixed assets
Current assets
Liquid assets
Owner's equity
Loan capital
example
Inventory - Building - Company vehicles
(Lasts longer than one year)
example
Stock - Debitors
(Lasts less than one year)
example
Cash- Bank
example
The remainder that is borrowed, also known as the debts

#### Slide 15 -Slide

De Balans
Statement of changes
Indicates which balance items increase or decrease.

Pay attention! Only the balance items that change, and the amount by which they change, are included in this balance.
Statement of changes

#### Slide 16 -Slide

De Balans
Statement of changes
Imagine that candy is sold for €40. The cost price of this candy is €20. The payment is made in cash.

Record this on the statement of changes.
Pay attention!
The stock quantity is always recorded on a balance sheet at cost price!
Statement of changes

#### Slide 17 -Slide

De Balans
Statement of changes
Imagine that candy is sold for €40. The cost price of this candy is €20. The payment is made in cash.

Record this on the statement of changes.
Pay attention!
The stock quantity is always recorded on a balance sheet at cost price!
Statement of changes
stock of candy    -€20
Cash                      +€40
--------------------------------
+€20
Owner's equity   +€20

--------------------------------
+€20

#### Slide 18 -Slide

De Balans
Statement of changes
The earned €40 is taken to the bank to be deposited into the checking account.

Record this on the statement of changes.

Statement of changes

#### Slide 19 -Slide

De Balans
Bank +€40
Cash  -€40
----------------                  €0

----------------                  €0
Statement of changes
The earned €40 is taken to the bank to be deposited into the checking account.

Record this on the statement of changes.

Statement of changes

#### Slide 20 -Slide

De Balans
lesson 3 Statement of changes + debitor & creditor
lesson 4 profit and loss account + VAT

#### Slide 21 -Slide

De Balans
Lesson 3 - statement of changes + debtors & creditors
Statement of changes

#### Slide 22 -Slide

De Balans
debtors & creditors
Statement of changes

#### Slide 23 -Slide

De Balans
debtors
creditors
The amount that your customers still owe you. These customers have purchased your products on credit!
The amount that you still have to repay to, for example, suppliers. So, you have purchased products on credit that you still need to repay!
debtors & creditors
Statement of changes

#### Slide 24 -Slide

De Balans
Debtors
Creditors
Why on the debit side?
A debtor represents money that is still owed to you, in other words, it represents value for the company. Therefore, a debtor is considered an asset, and assets are on the debit side.
Why on the credit side?
Amount that you still owe to pay, where debts always appear on the credit side.
Statement of changes
debtors & creditors

#### Slide 25 -Slide

De Balans
Debtors
+
=
A customer buys a product from you on credit. In this case, the debtors entry increases.

#### Slide 26 -Slide

De Balans
Debtors

-
=
A customer pays off their outstanding invoice to you after a specified credit term. In this case, the Debtors entry decreases.
credit term
A specific period given to repay an invoice. The length of this period is determined by the seller and can be a month, week, quarter, or year.

#### Slide 27 -Slide

De Balans
Creditors
+
=
You purchase products from a supplier on credit. You haven't paid for these products yet, so the creditors entry increases!

#### Slide 28 -Slide

De Balans
Creditors
-
=
You pay off your outstanding invoice to the supplier after a specified credit term. In this case, the creditors entry decreases.

#### Slide 29 -Slide

De Balans
lesson 4 profit and loss account + VAT

#### Slide 30 -Slide

De Balans
Profit and loss account
Profit and loss account
Kosten
opbrengsten
costs
Revenue

#### Slide 31 -Slide

De Balans
What is it?
Flow quantity
A summary of costs and revenues during a specific period. In the profit and loss account, we do not discuss balance sheet items but rather refer to flow quantities.
Kosten
opbrengsten
Profit and loss account
Profit and loss account
Revenue
Costs
Measured over a period (hour, day, week, month, etc.). The money withdrawn from your account in a month is an example of a flow quantity.

#### Slide 32 -Slide

De Balans
Profit and loss account
Profit and loss account
costs
revenues
Example:
Profit and loss account
turnover €5000

Balance (loss)........
------------------------------
x
-costs of sales €1500
-Rent €620
-Interest costs €25
-depreciation charges €200

Balance (Profit)......
------------------------------
X
Pay attention!
The profit and loss account must also be in balance. For this, we use the balance (profit/loss).

#### Slide 33 -Slide

De Balans
Profit and loss account
Profit and loss account
costs
revenues
Example:
Profit and loss account
turnover €5000

Balance (loss)
------------------------------
€5000
-costs of sales €1500
-Rent €620
-Interest costs €25
-depreciation charges €200

Balance (Profit)€1155
(€5000-€3845=€1155)
------------------------------
€5000
Pay attention!
The profit and loss account must also be in balance. For this, we use the balance (profit/loss).

#### Slide 34 -Slide

De Balans
Profit and loss account
Profit and loss account
costs
revenues
Example:
Profit and loss account
turnover €5000

Balance (loss)
(€5845-€5000=€845)
------------------------------
€5845
-costs of sales €3000
-Rent €620
-Interest costs €25
-depreciation charges €200
-wages €2000

Balance (Profit)
------------------------------
€5845
Pay attention!
The profit and loss account must also be in balance. For this, we use the balance (profit/loss).

#### Slide 35 -Slide

De Balans
What is it?
Tax that consumers have to pay on the products they purchase.
Why do we pay it?
It has become a significant source of income for the government, funding various things that benefit the Dutch citizens.

#### Slide 36 -Slide

De Balans
Johannes buys a pair of pants for €85 excluding 21% VAT.

1)What is the cost of the pants including VAT?
2)How much VAT does Johannes pay?
Exclusive & Inclusive
Exclusive: Price without the VAT added
Inclusive: Price with the VAT added

#### Slide 37 -Slide

De Balans
Johannes buys a pair of pants for €85 excluding 21% VAT.
1)What is the cost of the pants including VAT?
2)How much VAT does Johannes pay?
1)  €85 + (€85x 0.21) = €102.85
or
€85/100 = €0.85
€0.85 x 121 = €102.85
2) €102.85 - €85 = €17.85
or
€85/100 = €0.85
€0.85 x 21 = €17.85

De Balans
End of Chapter 5