Accounting chapter 9 (Financial Position)

Question 1

Define Statement of financial position/?

Answer 1

A statement of financial position is a statement of assets and liabilities of a business at a certain time

Question 2

What are the two types of assets?

Answer 2

Non current assets and Current assets

Question 3

Define Non current assets?

Answer 3

Assets that last a long time (Over a year)

Question 4

Define Current assets?

Answer 4

. Assets that do not last long (Less than a year)
. They arise from the normal trading activity of the business and their amounts are constantly changing. Ex( Inventory, trade receivables, bank and cash)

Question 5

What are two types of Non current assets?

Answer 5

Tangible and Non-tangible assets

Question 6

Define Tangible Non current assets?

Answer 6

Non current assets that can be seen and touched and help a business make revenue. Ex (Land and building, Machinery, Fixture and equipment, Motor vehicles)

Question 7

In what order are tangible non current assets shown?

Answer 7

The more permanent assets are shown first (liquidity)

Question 8

Define Intangible non current assets?

Answer 8

. Non current assests that do not have material substance (can not be seen or touched). ex( goodwill, brand names, and trademarks)
. Intangible non current assets are shown before tangible

Question 9

In what order are current assets shown?

Answer 9

Assets further away from cash are shown first.
For example: Inventory, Trade receivables, Bank and then Cash

Question 10

What are the two types of liabilities?

Answer 10

Non current liabilities and current liabilities

Question 11

Define Non current liabilities?

Answer 11

Amount owed by the business which are not due for repayment within the next 12 months. For example (Long term loan and mortgage)

Question 12

Define current liabilities?

Answer 12

Short term liabilities that also arise from trading activities. For example (Trade payable and Bank overdraft).