ENTERPRISE THEORY – BALANCE SHEET
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Ing. Tomáš Pražák, Ph.D.

An entrepreneur is a person who seizes business opportunities, has an idea and entrepreneurial
resources, is capable of effectively combining them, and is willing to bear full responsibility and
reasonable business risks.

INTRODUCTION TO ASSETS AND LIABILITIES
Definition of assets: Resources owned by a company that have economic value.
Definition of liabilities: Obligations or debts that a company owes.
Importance: Understanding them is crucial for analyzing the financial health of a business.

Types of Assets
Current Assets: Cash, receivables, inventory (convertible to cash within a year).
Fixed Assets: Buildings, machinery, equipment (long-term investments).
Intangible Assets: Patents, trademarks.
Financial assets (e.g., shares in other business entities, securities intended for long-term
investment).

Types of Liabilities
Current Liabilities: Accounts payable, short-term loans (due within
a year).
Long-term Liabilities: Bonds payable, mortgages (due after one year).
Contingent Liabilities: Potential obligations (e.g., lawsuits).

The Relationship Between Assets and Liabilities
The role of equity: Assets = Liabilities + Equity.
Equity represents the ownership value in a company (Shareholders' Equity and Owners‘Equity).
Essentially, equity is what would be left for the owners (shareholders) if the company sold off all
its assets and paid all its debts.

The Relationship Between Assets and Liabilities
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Equity?

1.Finished products
2.Semi-finished products
3.Liabilities to suppliers
4.Receivables
5.Liabilities to employees
6.Current account
7.Overdraft loan
8.Cash
9.Financial investments
10.Machinery and equipment
11.Bank loan

From the following accounting items, create a balance sheet for the company Perpetum, a.s.:
•Long-term tangible assets: 5,200,000 CZK
•Inventory: 2,800,000 CZK
•Receivables from trade relations: 1,900,000 CZK
•Equity: 4,000,000 CZK
•Liabilities from trade relations: 2,300,000 CZK
•Bank loans: 3,600,000 CZK

Solution:
Balance Sheet
Credit [thousands CZK]
Debit [thousands CZK]
Long-term tangible assets
5 200
Equity
4 000
Inventory
2 800
Liabilities
2 300
Receivables
1 900
Bank loans
3 600
Total Credit
9 900
Total Debit
9 900

During the observed month, the following business transactions took place:
• Cashless sale of a printing press (long-term asset) for 1,400,000 CZK (payment due in 30 days).
• Purchase of materials for 200,000 CZK (payment due in 25 days).
•
Create the balance sheet.

Credit [thousands CZK]
Debit [thousands CZK]
Long-term tangible assets
3 800
Equity
4 000
Inventory
3 000
Liabilities
2 500
Receivables
3 300
Bank loans
3 600
Total Credit
10 100
Total Debit
10 100