Statement of financial position: shows the value of a business's assets and liabilities at a particular time
Assets: are those items of value which are owned by the business .They may be non-current (fixed) asset or ( short term) current assets
Non-current assets ( which a business can keep for more than a year) : land, buildings, equipment and vehicles. These can be depreciate year after year
Current assets ( which a business only held for short amount of time) : cash, inventories debtor customers who own money to the business)
Liabilities: are debts owed by the business. They may be non-current ( long term ) liabilities or ( short term) current liabilities
Non-current liabilities (long term): long term borrowing which do not have to be repaid within a year
Current liabilities ( short term): money that the business which have to repair within a year : bank overdraft/ accounts payable ( suppliers/ creditors)
Definition
Non-current assets: items owned by the business for more than one year
Current assets: are owned by a business and used within one year
Non- current liabilities: long term debts owned by the business, repair over a year
Current liabilities: short term debts owned by the business, repair in one year
Total asset - total liabilities = owner's equity ( shareholder's funds in a limited company)
Shareholder's equity ( shareholder's fund ): total sum of the money invested into the business by the owner- shareholders
Main features of an income statement
Assets = liability + capital
fixed assets + (current asset - current liabilities) = long term liabilities + capital
Capital = retained profit + share capital
Current asset - current liabilities = working capital
Long term liability + shareholder's fund = capital employed
Shareholder's fund = price of each share x no. of share issue
Stakeholders interested in balance sheet:
Supplier
Bank
Investor ( look at the value of asset/ how much the business worth)
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