Balance Sheet Flashcards
Balance sheet
a statement of what a business owns and what it owes at a particular point in time i.e. its assets and liabilities.
Formula
assets - liabilities = shareholders’ funds
it will always balance
Fixed assets
buildings
plant and equipment
vehicles
fixtures and fittings
(all at purchase price)
Balance sheet structure
fixed assets current assets current liabilities net current assets long term liabilities net assets
Current assets
current = can be turned into cash within a year
stocks - inventory
debtors - amount owed to company (mainly by customers)
cash - money in the bank, stocks and bonds
Current liabilities
What the company has to pay within the year.
e.g. bank loans, trade creditors, corporation tax, PAYE & VAT
Net Current Assets
current assets - current liabilities
long term liabilities
due in greater than a years time.
loans
hire-purchase finance
net assets
net assets = fixed assets + current assets - current liabilities - long term liabilities
shareholders funds
shareholders funds = assets-liabilities
capital and reserves
called-up share capital
revaluation reserve
profit and loss account
called-up share capital
the amount invested in shares, both initially and in subsequent share issues
revaluation reserve
the increase in the value of the freehold building
profit and loss account
profit (after tax) left in the business and not paid out as dividends.
Acid test
current assets - stock / current liabilities
can the short-term assets cover the short-term liabilities without the selling of stock?
