5.4 – Balance Sheets Flashcards
What is a Balance Sheet?
Sows the value of a business’ assets and liabilities at a particular time. It is also known as ‘statement of financial position’.
What are Assets?
Items of value owned by the business.
What are Fixed/Non-Current Assets?
are assets that remain in the business for more than a year – their values fall over time in a process called depreciation every year. ex: buildings, vehicles, equipment, etc.
What are Short-Term/Current Assets?
Owned only for a very short time. ex: Inventory
What is a example for Intangible (cannot be touched or felt) Non-Current Assets?
Copyrights and patents
What are Liabilities?
Debts owed by the business to its creditors.
What are Long-Term/Non-Current liabilities?
Do not have to be repaid within a year. ex: loans, debentures, etc.
What are Short-Term/Current Liabilities?
Need to be repaid within a year.?
What is a formula to find out Working Capital?
CURRENT ASSETS – CURRENT LIABILITIES = WORKING CAPITAL
What is Shareholder’s Equity?
The total amount of money invested in the company by shareholders. This will include both the share capital and reserves.
What is a formula for Shareholder’s Equity?
SHAREHOLDERS EQUITY = TOTAL ASSETS – TOTAL LIABILITIES
What is a formula for total assets?
TOTAL ASSETS = TOTAL LIABILITIES + SHAREHOLDERS EQUITY
What is a formula for Capital Employed?
CAPITAL EMPLOYED = SHAREHOLDERS EQUITY + NON-CURRENT LIABILITIES
