Chapter-22 Flashcards
Statement of financial position
What is a balance sheet?
An accounting statement that records the assets, liabilities, and owners’ equity of a business at a particular date.
What are liabilities?
Debts that a business must pay in the future.
What are non-current (fixed) assets?
Resources that a business owns and expects to use for more than one year.
What are assets?
Resources owned by a business.
What is trade receivable?
The amount of money owed to the business by customers who have been sold goods on credit.
What are non-current liabilities?
Debts of the business which will be payable after more than one year.
What are current assets?
Resources that the business owns and expects to convert into cash before the date of the next balance sheet.
What is trade payable?
The amount a business owes to its suppliers for goods bought on credit.
What are current liabilities?
Debts of the business which it expects to pay before the date of the next balance sheet.
What is owner’s equity?
The amount owed by the business to its owners; includes capital and retained profits.
What is shareholders’ equity (funds)?
An alternative term for owner’s equity, but can only be used by limited liability companies.
What useful information does the balance sheet provide to stakeholders?
i) The assets the business owns
ii) What the business is owed
iii) What the business owes
iv) How the business finances its activities
