Balance sheet: Baines Nursery as at 31 July 2005
Freehold land/buildings £40000 Proprietor's capital £35500
Fixtures & fittings £ 5000 Bank loan £10000
Cash at bank £ 500
After six months in operation the Baines have accumulated enough cash to pay off their overdraft with £500 to spare. Their cash figure will fall (assets-) but so will the overdraft disappear (liabilities-) and the proprietors' capital will be increased by the amount of their own money now in the bank. This is, of course, a very simple form of balance sheet but it does illustrate the principles contained in all balance sheets. On the right are the liabilities or the sources of funds used by a business. On the left the listed assets show how these funds have been used.
