5.4 Statement of Financial Position

Question 1

Balance Sheets

Answer 1

Snapshot of assets & liabilities

Question 2

Fixed Assets

Answer 2

• Long term benefit
• Business wants to keep
• Depreciate

Question 3

Current assets

Answer 3

• Used up or sold soon
• Stocks: finished goods, WIPs & mats (inventories)
• Debtors: owe business money
• Cash

Question 4

Non-current liabilities

Answer 4

• Debts business won’t pay within a year
• Loans, mortgages & debentures

Question 5

Current liabilities

Answer 5

• What business owes short-term
• Creditors
• Overdrafts

Question 6

Uses of balance sheet

Answer 6

• Whether business is liquid
• If any asset can be sold off
• Whether the business can pay its debts