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Accounts > Balance Sheet > Flashcards

Balance Sheet Flashcards

1
Q

What is a Balance Sheet ?

A

A financial statement that shows the Assets, Liabilities & Capital of a business at a particular date

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2
Q

What are the three components of a Balance Sheet ?

A

Assets
Liabilities
Capital

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3
Q

What are Assets, & What are the TWO types of Assets ?

A

Economic resources OWNED by a business

The two types are Current & Non-current

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4
Q

What are Current Assets ?

A

Assets that are expected to be converted into cash or used up within one accounting year

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5
Q

What are the FOUR examples of Current Assets ?

A

Cash
Bank
Inventory
Accounts Receivable

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6
Q

What are Non-current Assets ?

A

Assets that are not expected to be converted into cash, to be used up or sold within one accounting year

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7
Q

What is another name for Non-current Assets ?

A

Fixed Assets

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8
Q

What are 5 examples of Non-current Assets ?

A

Furniture
Buildings
Land
Equipment
Motor Vehicles

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9
Q

What are Liabilities ?

A

Debts of the business (the amount the business OWES)

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10
Q

What is the person that the money is owed to called ?

A

The Creditor

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11
Q

What is Current Liabilites ?

A

Amounts that are expected to be paid off or settled within one accounting year

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12
Q

What are 3 examples of Current Liabilities ?

A

Accounts Payable
Bank Overdraft
Expenses Owing (e.g. salaries owing)

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13
Q

What are Non-current Liabilities ?

A

Amounts that are not expected to be paid off or settled within one accounting year

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14
Q

What are 2 examples of Non-Current Liabilites ?

A

Bank Loan
Mortgage

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15
Q

What is Capital ?

A

The resources invested into a business by its Owner(s)

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16
Q

When can an owner invest in their business ?

A

They can invest in the beginning of the business or during the life of the business

17
Q

What is the Accounting Equation ?

A

This is the relationship between Assets, Liabilities & Capital of the business

Assets = Liabilities + Capital

18
Q

What is Working Capital & what is the Equation ?

A

The amount of funds that a business has available to finance its day-to-day operations

WC = CA - CL
(working capital) = (current assets) - (current liabilities)

19
Q

The difference between a Positive & Negative Working Capital

A

Positive working capital ~ the business has enough funds to pay for its short term obligations
(business is considered liquid)

Negative working capital ~ enough funds is not available when the obligations become due
(business is considered insolvent / not liquid)

Accounts (4 decks)

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