By Roger Oldcorn (auth.)
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Extra resources for Company Accounts
22) 3 The Balance Sheet (2) - Capital and Liabilities In this chapter you will be able to find out about the 'other side' of the balance sheet. The last chapter was all about assets - things of value in the business this chapter willfocus on where the money has come from to pay for the assets. You will then be able to name the major sources offinance and classify them. In the last chapter you read about Wilbur's Tubs Ltd and how he decided to buy everything for the business out of his own money.
Self-check As time goes by. do you think that an asset such as a cheap radio will increase its value. or lose its value? What happens, usually, is that ordinary, mass-produced items lose their value as time goes by. However, the value of some things actually increases with the passage of time, especially if the item is very rare (like a painting by a famous artist) or made of expensive materials (like a solid silver teapot). Sometimes even everyday items can actually rise in value if they survive long enough; vintage cars are a good example of this type of item.
Both formats start with turnover and end up with trading profit of £12000. However. the way that number has been obtained seems very different.