Finance for the Arts
in Canada

Finance Whiz Quiz - Bonus Answer

The challenge, of course, is sorting out the Equity section. To do this, you need to understand the structure of the Balance Sheet, and how the two statements relate to each other.

Totaling Assets, Liabilities, Revenue and Expense should be a breeze. Since Assets = Liabilities + Equity, once you've calculated Assets you know what goes on the last line of the Balance Sheet. Now you can subtract Total Liabilities from it to find Total Equity. The Surplus or Deficit line on the Income Statement is the difference between Revenues and Expenses. The Current Earnings amount in the Equity section equals the year's Surplus or Deficit to date. Now you can subtract this amount from Total Equity to find the company's Retained Earnings.


	XYZ Company Balance Sheet
	As at June 30, 2004

	Assets:
	Cash and Investments	35,000
	Accounts Receivable	17,700
	Prepaid Expenses	1,100
	Total Assets	53,800

	Liabilities:
	Accounts Payable	18,500
	Deferred Revenue	26,500
	Total Liabilities	45,000

	Equity:
	Retained Earnings	7,900
	Current Earnings	900
	Total Equity	8,800

	Total Liabilities and Equity	53,800


	XYZ Company Income Statement
	For the Year Ended June 30, 2004

	Revenues:
	Box Office and Performance Fees	38,200
	Miscellaneous Revenue	800
	Fundraising	10,200
	Government Grants	105,200
	Total Revenues	154,400

	Expenses:
	Artistic, Production & Tech Fees	48,900
	Administrative Fees	25,200
	Artistic, Production & Tech Costs	11,600
	Touring Expenses	23,500
	Administrative Expenses	24,400
	Publicity & Marketing	20,000
	Total Expenses	153,600

	Surplus or Deficit	800

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Finance for the Arts in Canada

Finance Whiz Quiz - Bonus Answer

Finance for the Arts
in Canada