University Of Karachi
Department Of Mathematics
Topic: Balance Sheet
What is an Balance Sheet?
A balance sheet is a financial statement that shows a company’s
financial position at a specific point in time.
Basic Formula:
Assets = Liabilities + Equity
Assets:
Current Assets:
These are assets that can be converted into cash or used up
within one year.
Example
Cash, Account Receivable, Inventory , Prepaid Expense, Short
Term Investments.
Non-Current Assets:
These are assets that last longer than one year and are used to
run the business—not easily converted into cash.
Example
Property, Building, Machines, Vehicles (Vans, Trucks used for
business)
Maheen Nadeem
Liabilities:
Current Liabilities:
Liabilities that a business must pay within one year.
Example
Accounts Payable, Short Term Loans, Wages Payable, Taxes
Payable, Unearned Revenue
Non-Current Liabilities:
Liabilities that are not due within the next year — they’re
long-term obligations.
Example
Long Term Loans, Mortgage Payable, Bonds Payable, Deferred
Tax Liabilities
Maheen Nadeem
Q1: Create a Balance Sheet From Given Information.
Ali started the business on 1-july-2022 with a capital investment
of Rs. 100,000. He deposited Rs. 70,000 in the bank and kept Rs.
30,000 as cash. He purchased furniture for Rs. 20,000, bought
stock (inventory) worth Rs. 25,000, and paid Rs. 5,000 in
advance rent. He also took a short-term loan of Rs. 15,000 from a
friend.
Required:
Prepare a Balance Sheet for Ali’s business on the first day.
Maheen Nadeem
Q2: Create a Balance Sheet From Given Information.
Sana started a tailoring business on March 1, 2025, with a capital
of Rs. 160,000.
She deposited Rs. 90,000 into a bank account and kept the
remaining Rs. 70,000 in cash.
During setup:
● She purchased equipment worth Rs. 40,000, paid from the
bank.
● She bought fabric (inventory) worth Rs. 50,000, paid from
cash.
● She also paid Rs. 10,000 in advance rent for the shop from
cash.
● She received a short-term loan of Rs. 20,000 in cash from
her friend.
Required:
Prepare a Balance Sheet.
Maheen Nadeem
Question: 3
Sara started a boutique business on March 1, 2023, with a capital
of Rs. 200,000. She deposited Rs. 150,000 into the bank and
kept Rs. 50,000 in cash. The following transactions occurred
during her first week:
1.Purchased furniture worth Rs. 30,000.
2.Bought fabric inventory worth Rs. 40,000, of which Rs.
25,000 was paid in cash and the remaining on credit.
3.Paid Rs. 10,000 in advance rent for the shop.
Withdrew Rs. 5,000 for personal use.
4.Paid Rs. 8,000 for shop lighting installation (considered as
equipment).
5.Took a long-term loan of Rs. 30,000 from the bank.
Required:
Prepare a Balance Sheet.
Maheen Nadeem
Question: 4
Zayan started a tech retail business on April 1, 2023, with a
capital investment of Rs. 350,000.
He deposited Rs. 250,000 into the bank and kept Rs. 100,000 in
cash.
The following transactions occurred during his first week:
1.Purchased furniture worth Rs. 50,000, paid through the
bank.
2.Acquired machinery for Rs. 80,000, to be paid over two
years (installment basis).
3.Installed security equipment worth Rs. 30,000, paid in cash.
4.Purchased inventory worth Rs. 60,000, of which Rs. 40,000
was paid in cash, and the remaining was on credit.
5.Paid Rs. 15,000 in advance rent for the shop.
6.Deposited Rs. 5,000 from daily sales into the bank account.
7.Took a long-term loan of Rs. 70,000 from the bank
(repayable after 5 years).
8.Received a loan of Rs. 30,000 from his father, repayable
after 3 years.
9.Obtained Rs. 20,000 machinery credit to be paid after 2
years.
10. Bought office stationery on credit for Rs. 10,000.
11. Outstanding utility bill of Rs. 6,000.
12. Salaries payable amounting to Rs. 14,000
Maheen Nadeem
Required:
Prepare a classified Balance Sheet for Zayan’s business as
of April 1, 2023.
Question: 5
On May 1, 2024, Hamza started a computer accessories business
with an initial investment of Rs. 250,000. He deposited Rs.
180,000 into a business bank account and kept Rs. 70,000 in
cash. During the month, the following transactions occurred:
1.Purchased computers and office desks worth Rs. 60,000.
2.Bought stock (keyboards, mouse, etc.) for Rs. 50,000, out of
which Rs. 30,000 was paid in cash and Rs. 20,000 was on
credit.
3.Paid Rs. 15,000 for advance shop rent (for the next 3
months).
4.Paid Rs. 10,000 in business registration and licensing fees
(considered an expense).
5.Withdrew Rs. 5,000 from the business for personal use.
6.Took a loan of Rs. 40,000 from a relative (repayable after 2
years).
Required:
Prepare a classified Balance Sheet for Zayan’s business as of
May 1, 2024.
Maheen Nadeem