Balance Sheet

State the balance sheet effects of each of the following (provide a explanation):

The owner withdraws R160 from the firm's bank account for his own use.

When the owner withdraws R160 from the firm's bank account for his own use, he will credit the bank account and debit the owner's draw account. This will effectively reduce the amount of current assets and owner's equity by R160.

For example:

The accounting equation is Assets = Liabilities + owner's equity. If before the withdrawal Assets is equal to 10160, Liabilities equal to 2000, and Owner's Equity equal to 8160 then you would have the equation 10160 = 2000 + 8160.

But after the withdrawal Assets is equal to 10000, Liabilities equal to 2000, and Owner's Equity equal to 8000 and you would have the equation 10000 = 2000 + 8000 showing the asset and owner's equity accounts having been reduced.

Balance Sheet Accounts Reconciliation

by Vote for Pedro
(Queensland)

Very simply, how does one do reconciliations of balance sheet accounts?

Hello Vote for Pedro,

Thank you for your question.

Reconciliation's of balance sheet accounts are typically done on a monthly basis.

The reconciliation is accomplished by obtaining a monthly account statement showing the ending balance at the end of the month and matching this balance to what is showing on the balance sheet on the same date.

Any difference in the amounts should then be able to be accounted for through listing all of the outstanding deposits and withdrawals.