Balance Sheets Flashcards
Current Asset
items which the business can easily turn into cash - liquid assets. e.g cash, receivables + inventory
What are liquid assets?
current assets
another term for receivables
debtors
Non Current assets
Assets that are not intended to be turned into cash, purchases which it uses over long periods of time. e.g property, equipment + machinery
what are fixed assets?
non-current assets
Goodwill
Goodwill is a non-current asset. it is an intangible asset that is associated with the purchase of another company. It represents the value that competitive advantage that acquiring the company has given the business.
Total Assets
current assets + non-current assets
Current Liabilities
debts of the business that must be paid within the next 12 months e.g overdrafts or payables
another term for payable?
creditors
Non-current liabilities
Money owed by the business for more than one year e.g loans + mortgages
what are creditors?
payables
what are debtors?
receivables
what combines to make total equity?
retained profits, share capital, reserves etc
what must total equity do?
balance with net assets
how to calculate net current assets?
current assets - current liabilities
another name for net current assets?
working capital or liquidity
another name for liquidity?
working capital or net current assets
how to calculate working capital?
current assets - current liabilities
what are net current assets used to find?
if a business can operate in the short term - is it liquid?
what are total assets?
what the business has spent its money on
how to calculate total assets?
current assets + non-current assets
how to calculate net assets?
total assets - total liabilities
what are net assets?
the top half of the balance sheet, the higher the better. It is what a company is worth and what it has spent its money on.
what is total equity?
the second half of the balance sheet, where the money has come from. Must be equal with net assets
