Balance Sheet Flashcards
What does the balance sheet contain?
Assets, liabilities and equity
What are current assets?
Assets expected to be used or sold within the next year
Give examples of current assets
Cash, cash equivalents, cash receivable, inventory and deferred revenue
What are non-current assets?
Assets that are not expected to be sold within the next year
Give examples of non-current assets
Property, lease, equipment, vehicles, etc.
True or False: Assets are listed in order of their liquidity?
True, they are in order of how easily the asset can be converted into cash
What are current liabilities?
Obligations that are due within the next year
What are examples of current liabilities?
Money owed to suppliers (accounts payable), money that has been paid but the service has not been delivered (deferred revenue) or portion of long-term debt that should be paid this year
What is a non-current liability?
Obligations that are not due this year
What are examples of non-current liabilities?
Long term debt or money that has been paid but the service has not yet been delivered
What does a balance sheet provide?
A snapshot of a companies assets, liabilities and equity at a single point in time
What is equity?
It is whatever left over for shareholders if all the assets were liquidated and all liabilities were paid off
What does it mean if the Equity is positive?
It means that the company has enough assets to cover its liabilities
What is an income statement?
Performance of a companies income over a period of time, and shows if a company is making profit or not
What is contained in an income statement?
Gross profit, operating expenses, income before tax and income after tax
What is gross profit?
Gross profit is “total revenue” minus the “total cost of revenues”
True or False: Operating expenses does not pertain to the cost of producing a good, but rather the expenses involved in more clerical or admin work?
True
What is shareholder / owner equity?
What is leftover for the shareholders after all assets have been liquidated and all liabilities have been paid off
What does it mean if a companies shareholder equity is positive?
This means that the company has enough assets to cover its liabilities, the opposite is true if it is a negative number
