balance sheet terms

Question 1

net profit

Answer 1

aka final profit

expenses minus gross profit

Question 2

total assets

Answer 2

monetary value of a property beyond any amounts owed (everything a company owns - including liabilities)

Question 3

what are liabilities

Answer 3

what the company owes

Question 4

current assets

Answer 4

liquid assets (easy accessible cash)

Question 5

example of liquid assets

Answer 5

accounts receivable

Question 6

accounts receivable

Answer 6

soon to be added to companies current assests

ex: payments made with credit cards, large flow of money coming in from a big catering order (think of money the company anticipates will be received soon)

Question 7

accounts payable

Answer 7

bills the company anticipates to pay for soon

for ex: bills that are on a quarter or monthly schedule to be paid

Question 8

accumulated depreciation

Answer 8

depreciation of an item minus the total cost of the item

ex: you paid for a new iphone 13 in full and it was 1300$ but in 1 year a new iphone comes out so your iphone 13 is only worthed 500$ when you trade it in for the new iphone

so depreciation value is 1300 (original cost) -800 (depreciation) = 500 (new current worth)

Question 9

current liabilities

Answer 9

accounts payable + accrued expenses that need to be paid off in the next 12 months

Question 10

owner’s equity

Answer 10

the value of what the company owns including the companies income that is not shared to shareholders (retained earnings)

Question 11

retained earnings

Answer 11

the companies income that the company keeps for themselves

they don’t share this money to shareholders

retained earnings are what the company keeps from the income (profit)